Updated: 1 - As young consumers rush to buy Coach bags, Tapestry raises its annual performance forecast.

Added share information in paragraph 2

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Reuters, November 5 - Tapestry (TPR.N) raised its annual revenue and profit forecasts on Thursday, betting that young affluent consumers will buy its Coach handbags during the holiday season, even as the broader luxury goods industry is grappling with slowing demand.

Shares of the company rose about 3% in premarket trading.

The high-end handbag maker also posted first-quarter revenue that exceeded market expectations, with particularly strong sales growth in China, where local revenue jumped 43%. Executives told Reuters that the quarterly profit beat was largely due to Coach’s performance in North America.

But in its largest market, North America, the overall growth momentum slowed slightly as the Kate Spade brand faced weaker sales.

Based on reported figures, Coach’s quarterly revenue rose 16%, while Kate Spade’s sales declined by 10% versus a year ago.

Tapestry has benefited from Coach’s rising popularity among Gen Z consumers in North America, China, and Europe — the company has successfully targeted this demographic through bag charms and other products, as well as marketing campaigns featuring celebrities like actress Elle Fanning and K-pop star So-yeon.

“We see strong growth across every group, no matter their economic status or age cohort,” Coach CEO Todd Kahn told Reuters.

“Our product and value proposition are very attractive in our current price range, so we’re not stepping up promotions,” Kahn added. He cited the upcoming holiday shopping season and the brand’s “sweet-spot” pricing of $200 to $500.

Tapestry now expects to repurchase shares worth $1.7 billion in the current fiscal year, up $350 million from previous guidance.

Despite cutbacks on discretionary spending by lower-income consumers, affluent Americans continue to purchase “accessible luxury” products from brands such as Coach and Ralph Lauren RL.N. This helped U.S. retail sales (link) post bigger-than-expected gains in September, even as economic uncertainty loomed.

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Tapestry expects its fiscal 2027 revenue to be between $8.5 billion and $8.6 billion, compared with its previous forecast of $8.4 billion to $8.5 billion.

The company also expects annual earnings per share to be between $8.25 and $8.35, compared with earlier guidance of $7.80 to $7.90.

Meanwhile, global luxury brands including Kering PRTP.PA, parent of Gucci, French luxury group LVMH LVMH.PA, and Hermes HRMS.PA, are facing new challenges as Middle East tensions rise and China steps up tax scrutiny on affluent shoppers. These add to existing pressure from subdued demand in China and the U.S. (link).

According to data compiled by London Stock Exchange Group (LSEG), Tapestry’s quarterly sales rose 11.1% to $1.89 billion, while analysts had expected a 9.12% increase to $1.86 billion.

Its adjusted earnings per share were $1.82, above expectations of $1.57.

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