By Savyata Mishra
(Reuters) – Tapestry on Thursday raised its 2025 revenue and profit forecasts for a third time this year, taking advantage of its limited exposure to the sweeping U.S. tariffs and higher full-price sale of its popular Coach handbags.
Its shares rose 4% in early trading as steady demand for the company’s Tabby, Brooklyn and Empire leather handbags among younger shoppers in North America, Europe and China helped it beat third-quarter results expectations.
The company’s sales benefited from product innovations, a sharp marketing strategy and full-price selling and come despite a downturn in the luxury market that has hurt players such as French luxury groups LVMH and Kering.
“Tapestry, it seems, has found a sweet spot in the luxury food chain …siphoning off high-end customers now reconsidering whether they really need a five-figure handbag,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
Tapestry’s price increases boosted margins, which grew 140 basis points in the quarter from last year. Its Empire bags are priced between $250 and $895 on Coach’s website, while Tabby’s standard shoulder bags sell for $450.
Coach products are made in Vietnam, Cambodia, the Philippines and India with no vendor providing 10% or more of total inventory purchases, according to Tapestry’s 2024 annual report. It also had limited exposure to China.
The company pulled forward inventory receipts ahead of tariffs going into effect in April, company executives said on a post-earnings call. It was also optimizing its global supply chain to minimize tariff exposure where possible.
Tapestry expects profit of around $5 per share, compared to a prior forecast of $4.85 to $4.90. Annual revenue is projected to be about $6.95 billion, compared to its earlier expectation of more than $6.85 billion.
Net sales for the quarter ended March 29 came in at $1.58 billion, above estimate of $1.53 billion, according to data compiled by LSEG. It earned $1.03 per share, beating estimates of 88 cents.
(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)
