Tapestry Lifts Forecast on Coach's Tabby Bag Success

Tapestry Boosts Forecast on Strong Holiday Sales

Tapestry, the parent company of Coach, has raised its annual earnings forecast for a second time. The revision follows a strong holiday quarter where revenue and earnings significantly surpassed analyst expectations, driven by strong demand for its affordable luxury goods.

Coach's Viral Success Drives Growth

The company's performance was primarily powered by its Coach brand, which saw revenue surge 25% to $2.14 billion. This growth is largely attributed to the immense popularity of its Tabby handbags among Gen Z customers, a success bolstered by a 40% increase in marketing spending. While Coach thrives, the company's Kate Spade brand continues to struggle, with sales falling 14%.

Upgraded Financial Outlook

Reflecting this strong momentum, Tapestry now projects full-year adjusted earnings between $6.40 and $6.45 per share, up from a previous range of $5.45 to $5.60. The company also increased its full-year revenue expectation to over $7.75 billion and raised its fiscal 2026 share buyback plan to approximately $1.2 billion.

Summary and Outlook

Tapestry's strategy of investing heavily in Coach's brand marketing is yielding significant returns, positioning the brand for further growth. This success provides a crucial buffer as the company continues its efforts to reset the underperforming Kate Spade brand.

FAQ

Q: Why did Tapestry raise its annual forecast?
A: Tapestry raised its forecast due to a better-than-expected holiday quarter, driven by a 25% revenue increase at its Coach brand from high demand for Tabby handbags.

Q: What is Tapestry's new earnings guidance?
A: The company now expects full-year adjusted earnings per share to be in the range of $6.40 to $6.45.

Source: Investing.com