Todd Kahn 0.6 9 ideas

The Coach CEO states, "You have seen some of those European handbag makers raise their prices... I find it offensive that somebody has to save four months of salary to buy a handbag." European luxury conglomerates (LVMH, Kering) have aggressively raised prices, effectively abandoning the aspirational/entry-level consumer. This creates a vacuum that Coach is filling. As Gen Z becomes more value-conscious ("very value driven"), the ultra-luxury brands risk losing volume growth to accessible alternatives. AVOID European Luxury ADRs as they face market share erosion in the entry-level segment. Ultra-wealthy consumers are less price-sensitive, so top-line revenue for these firms may remain robust despite lower volume.

Coach delivered brand revenue growth of 25% for parent company Tapestry in the quarter ended Dec 2025. They acquired 2.9 million new customers and are seeing 5 straight quarters of double-digit gains. The brand has successfully shed its "boomer/mother's brand" image and captured the Gen Z demographic, which will have the largest economic footprint by 2030. By positioning itself as "expressive luxury" (accessible pricing) while competitors hike prices, Tapestry is capturing the mass-affluent market share that can no longer afford European luxury. LONG Tapestry (TPR) as the direct equity play on the Coach brand resurgence and Gen Z spending power. Fashion is cyclical; if Gen Z trends shift rapidly away from "vintage/heritage" looks, growth could stall.

"Malls are alive and thriving." The speaker notes that despite being digital natives, Gen Z wants to physically go into stores to touch products. Shopping center owners are seeing packed stores. If Gen Z is returning to physical retail for "experiences" and product verification, the "Retail Apocalypse" thesis is overstated for Class A malls. High-traffic tenants like Coach act as anchors, stabilizing occupancy and driving sales-per-square-foot for landlords. LONG Class A Mall REITs (Simon Property Group, Macerich) as a second-order play on the return of the young consumer to physical shopping centers. A broader economic recession would curb discretionary spending and foot traffic regardless of brand popularity.

Coach (owned by Tapestry, TPR) has achieved 5 straight quarters of double-digit growth, driven specifically by capturing the Gen Z demographic (2.9 million new customers in the holiday quarter). The brand has successfully transitioned from "accessible luxury" to "expressive luxury," allowing them to maintain pricing power (refusing to discount heavily) while expanding globally (100 new stores planned for China). LONG. The successful brand turnaround and resonance with the largest future economic demographic (Gen Z) signals durable growth. A slowdown in Chinese consumption or a shift in Gen Z fashion trends.

Coach grew 25% last quarter, explicitly stating they are "growing the category" and taking share from European luxury brands. They operate in the $200-$500 "sweet spot." As European luxury brands (LVMH, Kering) raise prices aggressively, they are pricing out the aspirational Gen Z consumer. Coach is capturing this abandoned demographic with high-quality leather goods at accessible price points. LONG. Tapestry (TPR) is winning the "trade-down" effect in luxury. A severe pullback in Chinese consumer spending (a key growth market for Coach).

Coach (TPR) has pivoted successfully to Gen Z through data-driven design. 70% of growth is coming from international markets. International growth provides a natural hedge against US import tariffs. The brand's resonance with Gen Z creates pricing power and longevity beyond the "middle market squeeze." LONG TPR based on demographic capture and tariff insulation. Global economic slowdown impacting luxury discretionary spend.

Coach is seeing 20%+ growth, with 70% of future growth expected from international markets. The CEO explicitly states, "When I'm selling internationally, tariffs are no longer in play." The market fears regarding tariffs impacting US fashion retailers are overstated for Tapestry (Coach's parent) because their growth engine is non-domestic. Furthermore, their shift to "expressive luxury" allows them to maintain pricing power (increasing Average Unit Retail) rather than discounting, protecting margins despite rising leather costs. LONG. Tapestry is successfully navigating the macro headwinds (tariffs/inflation) that are crushing its peers. A slowdown in the Chinese consumer economy (a key part of the international growth mix).