Tapestry Lifts Outlook as Q1 Sales Rise 12 Percent on Coach Momentum

Tapestry Inc. raised its full-year revenue forecast by $100 million after first-quarter sales rose 12 percent to $1.9 billion, beating the $1.85 billion analysts expected. The company now projects revenues of $8.5 billion to $8.6 billion, up 6 to 7 percent for the fiscal year.

The results exclude Stuart Weitzman, which Tapestry spun off to Caleres last year.

What drove the quarter?

Net income for the quarter ended Sept. 26 climbed 30.9 percent to $360 million, or $1.76 per diluted share. Adjusted earnings of $1.82 per share cleared the $1.56 analyst forecast by a wide margin.

Coach carried the portfolio. The brand's sales jumped 16 percent to $1.7 billion. Kate Spade moved in the opposite direction: revenues fell 10 percent to $233 million as the brand retrenches to rebuild from a stronger base.

Coach handbag average unit retail prices increased at low-double-digit rates during the quarter — pricing power that flowed directly into margin. North America, the company's largest market, posted 7 percent Coach growth on top of last year's gains. International sales grew 30 percent.

CEO Joanne Crevoiserat said the results reflect structural advantages, not one-off demand. "The capabilities and culture that we're building are durable competitive advantages and those are on display," she said in an interview with WWD.

Where is the growth coming from?

Tapestry acquired 2.6 million new customers during the quarter. Gen Z accounted for 35 percent of them, while demand from existing customers also rose.

Crevoiserat framed the strategy in channel and category terms. "We're driving our growth through our direct business, through new customer acquisition and through our core leather goods category," she said. "We're doing that in North America, comping the growth that we saw last year, and we're doing that around the world."

She added that international markets remain relatively underpenetrated, positioning overseas expansion as the next volume lever alongside the larger North American base.

What is the Amplify strategy?

The quarter builds on Tapestry's three-year "Amplify growth strategy," laid out last year. The company hit its revenue targets in Year One. The plan rests on four pillars:

• Building emotional connections with consumers
• Fueling fashion innovation
• Delivering compelling experiences
• Leveraging the company's workforce

Corporate strategies of this type rarely produce results at Tapestry's scale. Last fiscal year, revenues reached nearly $8 billion — a 17 percent expansion adjusted for currency and the Stuart Weitzman divestiture. The current 6 to 7 percent guidance represents slower, but compounding growth on that base.

Crevoiserat called it exactly that: "What you're seeing is compounding growth. We're delivering growth on top of the growth that we delivered last year."

Can Coach reach $10 billion?

Coach posted $6.9 billion in sales last year. Crevoiserat said the $10 billion mark "is in our sights and I think there's even growth beyond."

A key part of that path runs through younger consumers. Crevoiserat said the company aims to "earn the right" to be Gen Z's "first luxury bag purchase," combining price-value discipline with product development built on customer insight.

The raised guidance signals management confidence that double-digit Coach growth can offset the deliberate Kate Spade contraction through the remainder of the fiscal year.