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Tapestry said revenues rose 8 per cent year-on-year to $1.6 billion in the third quarter of fiscal 2025, beating analyst and company expectations. Shares rose 9 per cent on Thursday in pre-market trading.
The successful quarter was turbocharged by Coach, which saw revenue growth of 15 per cent year-on-year to $1.3 billion. This mitigated declines at Tapestry’s two other, smaller brands — Kate Spade was down 12 per cent to $245 million, while Stuart Weitzman was down 17 per cent to $46.2 million. (The latter entered a definitive agreement to be sold to Caleres in February. The transaction is set to close this summer.)
“Our record third-quarter results outperformed expectations, reinforcing our position of strength,” CEO Joanne Crevoiserat told investors on Thursday morning. “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’s brand heat is a standout. The brand achieved its highest gross margin in history of 79 per cent. “We believe that the momentum we have unlocked is enduring and that Coach’s success is compounding,” Crevoiserat said. The brand drove double-digit sales growth in leather goods where, the CEO said, the Tabby family is overindexing. The New York family (including the Brooklyn bag) is also outpacing expectations. Bag charms and straps also added to Coach’s success. “Twenty years ago, traditional European luxury was two times our price points,” said Todd Kahn, CEO and brand president of Coach. “Today, they’re 10 times.” This, he said, is what gives him confidence that Coach’s value proposition cuts through globally.
By region, Tapestry revenues were up 9 per cent in North America to $951.7 million. Tapestry acquired 1.2 million consumers in the quarter (900,000 were Coach). Of these, two-thirds were Gen Z and millennials. “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. Gen Z and millennials transact at a higher AUR (average unit retail) than the balance of Tapestry’s consumer base, she added.
International revenue rose 8 per cent, led by an increase of 35 per cent in Europe to $92.9 million. This was due to strong consumer acquisition, especially among Gen Z, said CFO and COO Scott Roe. Revenues were up 4 per cent in the Asia-Pacific region. Japan’s 2 per cent decline to $138.2 million was offset by a 5 per cent increase in Greater China to $278.9 million; and 14 per cent growth in Other Asia countries to $93.9 million.
Given Coach’s strong growth, Tapestry raised its outlook for fiscal 2025. It now expects revenues of approximately $6.95 billion, representing growth of 4 per cent year-on-year (on a reported basis). This is ahead of prior guidance of approximately 3 per cent growth. Tapestry also anticipates adjusted free cash flow of approximately $1.3 billion, ahead of the prior guidance of $1.2 billion.
That said, the company flagged that this updated guidance is contingent on the expectation that tariffs on goods imported into the United States in accordance with the latest trade policies as of 10 April 2025 — including a 145 per cent tariff on goods from China and an additional 10 per cent on other global imports. (Seventy per cent of Tapestry’s products are manufactured in Vietnam, Cambodia and the Philippines. Less than 10 per cent of the company’s production is in China.) Tapestry expects these tariffs to have an immaterial impact on fiscal 2025 due to the timing of sell-throughs and in-transits.
As for 2026, the team declined to share specific expectations, but said they’re working to safeguard. “We’ve taken a number of actions already to mitigate the impact of tariffs,” Roe said. These include pulling forward inventory receipts, optimising across Tapestry’s diverse supply chain and working with suppliers. “We have scale and long-standing strategic relationships with very important suppliers. We’re working collaboratively to find opportunities to mitigate the cost of any potential tariffs.”
“There are two things we won’t do,” Roe continued: “We’ll never sacrifice innovation or quality as we think about those mitigating actions.”
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