TLDR: Tapestry, Inc. has announced a new growth strategy for 2025, emphasizing Gen Z consumers and aiming to return $4 billion to shareholders by fiscal year 2028 through buybacks and dividends. This strategy builds on the success of its Acceleration Program and focuses on customer acquisition, North American growth, and international market expansion, particularly in Greater China and Europe.
Tapestry, Inc., the parent company of Coach, Kate Spade, and Stuart Weitzman, has revealed an ambitious new growth strategy for 2025, with a strong focus on attracting Gen Z consumers and delivering substantial shareholder returns.
The luxury handbag maker plans to cumulatively return $4 billion to shareholders through fiscal year 2028 via share buybacks and dividends, representing 100% of the company’s adjusted free cash flow generation over the three years beginning fiscal 2026.
This new strategy, building on the success of its “Acceleration Program,” outlines long-term growth plans centered on several key pillars:
New Customer Acquisition: A primary focus will be on engaging Gen Z consumers, a demographic increasingly influential in the luxury market.
Sustained North American Growth: The company aims to maintain its strong performance in its home market.
Accelerated International Momentum: Tapestry is prioritizing expansion in key international markets, with a particular emphasis on Greater China and Europe.
Scott Roe, Tapestry’s CFO and COO, stated, “Our focused strategies and consistent execution position us to generate compounding growth. We expect to deliver durable mid-single digit revenue gains annually, expand our operating margins, and achieve double-digit earnings per share growth in fiscal years 2027 and 2028.”
Brand-Specific Projections:
Coach: The company anticipates Coach to achieve a three-year mid-single-digit revenue compounded annual growth rate. Operating margins for Coach are projected to expand to a mid-30% rate over the planning horizon, with a longer-term ambition to reach $10 billion in revenue. Coach has already seen success with product innovation, including popular items like the Tabby and Brooklyn bags, and customizable options that appeal to Gen Z’s desire for personalization.
Kate Spade: Kate Spade is expected to return to profitable top-line growth in fiscal 2027, accelerating to mid-single-digit revenue growth and a high single-digit operating margin in fiscal 2028.
Digital and Sustainability Focus:
Tapestry’s transformation is also rooted in a deep understanding of Gen Z’s values, including authenticity, inclusivity, and sustainability. The company has seen high-single-digit growth in digital revenue, with digital channels now accounting for over half of new customer acquisitions. This digital dominance is fueled by AI-driven personalization, seamless e-commerce platforms, and targeted social media campaigns. Furthermore, Tapestry’s commitment to ethical sourcing and carbon reduction aligns with Gen Z’s environmental priorities, enhancing brand loyalty.
These efforts have already yielded significant results. In Q2 2025, Tapestry added 2.7 million new North American customers, with over half being Gen Z and Millennials. Europe experienced a remarkable 42% revenue surge, largely driven by younger consumers. Coach’s revenue alone rose 10% year-over-year, attributed to strong handbag sales and price increases.
Financial Performance:
Tapestry’s disciplined operational strategy has also led to boosted profitability. Gross margins expanded by 280 basis points in Q2, thanks to lower freight costs and supply chain efficiencies. The company’s focus on full-price selling and reduced markdowns has further stabilized margins, allowing for reinvestment in growth and shareholder rewards.
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Tapestry shares have performed strongly, jumping 61% this year and gaining over 155% in the last 12 months. The company expects to buy back approximately $3 billion in common stock cumulatively from fiscal 2026 through fiscal 2028.
