Tapestry Unpacks Ambitious Growth Targets

Economic hiccups don’t seem to be slowing the luxury handbag market down. Tapestry, parent of Coach, Kate Spade New York and Stuart Weitzman, unveiled its latest growth plans for investors, targeting $8 billion in sales by 2025.

The New York company says that goal, which reflects a three-year annual growth rate of 6% and 7%, shows that its reinvention plan is working.

“Over the last two years, we radically transformed our company, with a sharpened focus on the consumer and commitment to brand building, delivering standout results,” said Joanne Crevoiserat, chief executive officer, in its release. “We have a tremendous runway and are poised to drive continued growth across each of our iconic brands.”

New initiatives are focusing on four key drivers: building lasting customer relationships; fashion innovation, especially in handbags and small leather goods, while accelerating growth in footwear and lifestyle products; better omnichannel experiences; and global growth. The latter means pressing beyond the U.S. and China, its two strongholds, into Southeast Asia and Europe.

By unit, Tapestry expects Coach revenue to reach $5.7 billion in those three years, and Kate Spade to grow in the high single digits to reach $1.9 billion. Stuart Weitzman, a division that has struggled recently, is expected to grow in the low-double digits to $450 million.

The goals impressed some observers. “We came away from Tapestry’s investor day with increased conviction in the multiyear earnings growth potential,” writes Mark Altschwager, an analyst who follows Tapestry for Baird.

While he thinks the path to those will likely not be quite the straight line Tapestry predicts, he believes Gen Z and millennial shoppers are likely to respond to Coach’s stepped-up emphasis on quality, style and value.

And while he points out that the company isn’t immune to economic slowdowns, “we remain impressed by the transformation that has taken hold at Tapestry over the past few years,” he says, making it “more nimble, customer-focused and data-driven.”

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