Gen Z and millennials fuel customer growth as Tapestry gains 1.2 million new consumers
Tapestry reported third-quarter fiscal 2025 revenues of $1.6 billion, up 8 percent year-on-year and ahead of both analyst and company expectations. Shares jumped 9 percent in pre-market trading Thursday.
The results were led by Coach, which delivered a 15 percent revenue increase to $1.3 billion. This offset declines at Kate Spade (down 12 percent to $245 million) and Stuart Weitzman (down 17 percent to $46.2 million), which is set to be sold to Caleres this summer.
“Our record third-quarter results outperformed expectations, reinforcing our position of strength,” CEO Joanne Crevoiserat said. “Our talented global teams drove accelerated top and bottom line growth against an increasingly complex backdrop, clearly demonstrating the power of consistent brand-building and our connections with consumers around the world.”
Coach was a standout, reaching a record-high gross margin of 79 percent. “We believe that the momentum we have unlocked is enduring and that Coach’s success is compounding,” Crevoiserat added. CEO and brand president Todd Kahn pointed to the brand’s pricing advantage: “Twenty years ago, traditional European luxury was two times our price points. Today, they’re 10 times.” He noted strong performance in the Tabby and New York (Brooklyn) bag families, as well as growth in bag charms and straps.
North America revenue grew 9 percent to $951.7 million, with 1.2 million new consumers acquired this quarter—900,000 through Coach. Two-thirds were Gen Z and millennials, who transact at higher average prices than older consumers. “We are capturing consumers who are entering the category for the first time, which is instrumental to fuelling enduring relationships, customer lifetime value and sustainable growth,” Crevoiserat said.
Internationally, revenue rose 8 percent, driven by 35 percent growth in Europe to $92.9 million. Asia-Pacific rose 4 percent overall: Greater China gained 5 percent to $278.9 million, Other Asia grew 14 percent to $93.9 million, while Japan declined 2 percent to $138.2 million.
Based on Coach’s momentum, Tapestry raised its full-year guidance. It now projects FY25 revenue of approximately $6.95 billion—up 4 percent year-on-year, ahead of previous 3 percent guidance. It also raised adjusted free cash flow projections to $1.3 billion from $1.2 billion.
These targets are contingent on U.S. trade policies effective April 10, including a 145 percent tariff on China imports and 10 percent on others. With most products made in Vietnam, Cambodia, and the Philippines, and less than 10 percent in China, the impact is expected to be minimal this fiscal year.
CFO Scott Roe added, “We’ve taken a number of actions already to mitigate the impact of tariffs,” including early inventory receipt and supplier collaboration. “We have scale and long-standing strategic relationships with very important suppliers… We’ll never sacrifice innovation or quality as we think about those mitigating actions.”