Coach Owner Tapestry Surges Ahead: Why the Luxury Giant Keeps Raising the Bar

Tapestry, the parent company of Coach, has once again surprised investors by raising its 2025 sales and profit forecasts—for the third time this year. The revisions, driven by surging demand for its luxury handbags and a strategic focus on key markets like North America and China, underscore Tapestry’s position as an outlier in a luxury sector grappling with broader headwinds.

A Repeated Forecast Upgrade Signals Strong Momentum
Tapestry now projects fiscal 2025 net sales of $6.95 billion, up from its previous $6.85 billion estimate, marking a 4% year-over-year increase on a reported basis. This upward revision comes after the company reported $1.58 billion in third-quarter sales, surpassing analysts’ expectations. The stock jumped 14% in premarket trading on the news, reflecting investor confidence in Tapestry’s ability to capitalize on its strengths.

The $5.00 per share earnings forecast—up from the prior $4.85–$4.90 range—adds further credibility to the optimism. This growth is occurring even as rivals like LVMH and Kering face softer demand, suggesting Tapestry’s product-centric strategy is paying off.

Why is Tapestry Outperforming?
1. Product Innovation and Brand Relevance:
Coach’s signature styles—the Tabby, Brooklyn, and Empire leather handbags—are resonating with younger consumers. Gen Z and Millennial buyers are fueling demand, particularly in North America, where Coach added 1.2 million new customers in the third quarter alone. The brand’s mid-teens digital revenue growth highlights its success in omnichannel retailing.

1. Market Focus and Tariff Mitigation:
   Tapestry’s limited exposure to U.S. tariffs—possibly due to sourcing strategies or inventory timing—has insulated it from headwinds affecting competitors. Meanwhile, its focus on full-price sales (vs. discount-driven competitors) has boosted margins. The company now expects ~100 basis points of operating margin expansion, driven by 140 basis points of gross margin growth in Q3.

2. Regional Strength:

3. North America: 9% constant currency revenue growth, fueled by customer acquisition and brand loyalty.
4. Europe: 35% revenue growth as the region emerges from post-pandemic demand lulls.
5. Asia-Pacific: 4% growth, despite headwinds in Japan and other regions.

The Numbers Tell the Story
While Kate Spade and Stuart Weitzman lagged—posting 12% and 17% declines in constant currency sales, respectively—the Coach brand carried the company with 15% constant currency growth. Tapestry’s decision to sell Stuart Weitzman (expected to close by summer . 2025) further signals a focus on core assets.

Profitability and Shareholder Returns
The revised guidance includes $1.3 billion in adjusted free cash flow, up from $1.2 billion, and a $17–18% tax rate, lower than initially projected. Tapestry also reiterated its goal to return over $2 billion to shareholders through dividends ($1.40 annual rate) and buybacks ($800 million remaining under prior authorization).

Risks on the Horizon
- Tariffs and Trade Policies: While Tapestry deems current tariffs “immaterial,” a worsening of U.S.-China trade relations could disrupt supply chains.
- Currency Fluctuations: A 50 basis point headwind from dollar appreciation already factors into the guidance.
- Competitor Adjustments: Rivals may eventually replicate Tapestry’s strategies, compressing margins.

Conclusion: A Luxury Outlier with Legs
Tapestry’s relentless focus on Coach’s brand equity, strategic market prioritization, and operational discipline have turned it into a rare growth story in the luxury sector. With $6.95 billion in projected revenue and a high-teens EPS growth rate, the company is not just keeping pace but leading the charge.

Investors should note that the August 14, 2025 earnings report will be critical in validating whether the fourth quarter delivers on the elevated expectations. For now, Tapestry’s execution—backed by 9% North American growth, 35% European expansion, and disciplined pricing—suggests the stock has room to run. In a sector where many brands are struggling, Tapestry’s results are proof that execution trumps trends.

The company’s ability to navigate tariffs, capitalize on Gen Z demand, and maintain full-price sales discipline positions it to outperform peers for the foreseeable future. Stay tuned for the final quarter’s results—but for now, Tapestry is the luxury player to watch.