Coach 'Extraordinarily Focused' on Gen Z, CEO Says
Speakers
Summary
- Coach is successfully pivoting from "accessible luxury" to "expressive luxury," driving 20%+ growth by targeting Gen Z, who spend 20% more on non-essential goods than other cohorts.
- The company is insulating itself from US tariff risks by projecting 70% of growth over the next two years to come from international markets where US tariffs do not apply.
- A "winner-take-all" dynamic is emerging in the $500-$600 handbag price point; Coach is expanding market share while direct competitors (specifically referencing Capri Holdings) are contracting.
- Leather input costs are up 20% YoY and expected to remain sticky (7-10% structural increase), favoring large players with deep supply chain resources over smaller competitors.
Trade Ideas
Coach competes in the $500-$600 range, which is "well below what you would see if you walk down Fifth Avenue to Louis Vuitton." The consumer is trading down or becoming selective. Coach's success suggests resilience in the "aspirational" tier ($500) rather than the "true luxury" tier ($2000+). If the economy tightens, the "expressive luxury" tier may capture volume from consumers who can no longer afford LVMH price points. WATCH. Monitor for signs of consumers trading down from top-tier luxury to accessible luxury. True luxury often remains resilient during downturns due to the wealth of the core customer.
Todd Kahn
CEO & Brand President, Coach (Tapestry)
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).
Romaine Bostick
Anchor, Bloomberg
When asked if competitors like "the Capris of the world" are doing as well, the response was a flat "No." The transcript notes that while Coach grows, competitors in the accessible luxury space are "still in contraction." The $500-$600 handbag market is zero-sum. If Coach is growing 20% while the overall sector is sluggish, they are cannibalizing the market share of Michael Kors (Capri Holdings). Capri lacks the "Gen Z" brand heat that Coach has manufactured via data analytics. AVOID (or SHORT). They are on the losing side of the brand resurgence cycle in accessible luxury. Potential M&A activity or a sudden successful rebrand by competitors.
Up Next
This Bloomberg Markets video, published February 18, 2026, features Romaine Bostick, Todd Kahn discussing LVMH, TPR, CPRI. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Romaine Bostick, Todd Kahn · Tickers: LVMH, TPR, CPRI