The tariff-driven economic upheaval of the past year has had a marked effect on consumer confidence, but Kate Spade and Coach owner Tapestry is still staking its forward-looking strategy on young shoppers, according to CEO Joanne Crevoiserat.
The executive spoke at the Semafor conference in Washington, D.C. on Tuesday, touting the fashion firm’s ability to buck prevailing downward trends in an economic environment that has been less than fertile for growth. “At Tapestry, we grew double digits around the world in the last quarter,” she said. “That’s double-digit growth in North America, double digit growth in China, and double-digit growth in Europe.”
The secret? Gen Z. “Our focus is on this young consumer. And people ask me all the time, ‘Isn’t this young consumer under pressure? And how is it that your business is so healthy, given the [economic] backdrop?’” she said. “The answer to that question is: we stay close to our consumers. We really want to understand what they’re going through, how they’re feeling, so that we can deliver not only great product, but experiences in marketing, and we can understand them at a deeper level.”
Focusing on young shoppers—many of whom doubt the future prospect of owning homes or hitting the traditional financial milestones of previous generations—is a strategic choice, she explained. “First, it’s authentic to who we are, as we do deep consumer research. We hear stories over and over again—‘I remember my first Coach bag. I bought it when I had graduated from school, and it really, I really felt like I was put together. It gave me confidence,’ or, ‘I bought this Kate bag when I got my promotion, and it made me feel great.’”
In an era where hope for the future is in short supply, Tapestry believes it can provide a much-needed serotonin boost while also generating lifelong sales leads. “That brand love that’s fostered for a lifetime starts with that first luxury bag purchase, so we’re focused on this Gen Z consumer, as we want to earn the right to be her first luxury bag purchase,” the CEO said.
The thinking goes deeper. Crevoiserat said that between President Donald Trump’s International Emergency Economic Powers Act (IEEPA) tariffs and other reciprocal duties, Tapestry has incurred over $200 million in added costs. “And that cost pressure is real, but we did not knee jerk and say, ‘We’re just going to raise prices to offset it.’ And in fact, in this fiscal year, we’ve fully mitigated it,” she said.
The firm has sought to shield consumers from the effects of the tariffs, knowing that their experience with its brands—Coach and Kate Spade—often begins with a peek at the price tag.
“We are focused on delivering value into the marketplace that the consumer recognizes. So we did not take price up in response. We doubled down on our capabilities to understand the consumer and deliver innovation, and that’s where we leaned in,” she added. “We have the supply chain that we’ve developed over decades. It’s enabled us to be agile and move production around the world.”
Then, there’s product strategy. In summer of 2024, before IEEPA tariffs became a kitchen table discussion point, Coach launched the Brooklyn handbag. Over the ensuing months, it has become “[o]ne of our most popular bags, particularly for Gen Z recruitment,” Crevoiserat said. “We had the insight and understanding of the consumer, but we also saw a market trend out there, and we created a bag that looked nothing like anything that we had built before, and delivered that into the marketplace at an incredible value.”
Ranging between $295 and $395, the sleek, minimalist style has proven an accessible essential for a young shopper looking for a modest splurge. “This is a bag that is genuine leather, crafted to last… and delivers a silhouette that is very on trend, and we see the customer respond. That’s how we’re winning, and that’s how we’re mitigating the tariffs,” the executive proclaimed.
Coach has also leaned into the customization craze with the creation of dozens of bag charms, some priced as low as $20. “The reality is, over decades of research, the customer buys 1.2 handbags a year. So we’re not going to win by just selling more handbags to the same person,” she added. “Bag charms are a way for her to continue to come back and connect with the brand with more frequency, and we see that happening.”
“And in addition, you can do that with friends. So we hear from our target consumer, the young consumer, that they crave this community aspect so and they also love shopping in stores,” she said.
While many brands have written off the depth of Gen Z’s pockets, Crevoiserat believes they’re overlooking the inherent value of capturing their attention before they age into peak purchasing power.
“We’re seeing Gen Z in total, as a as a cohort, be more loyal,” she said. “The frequency with which they’re coming back is higher for Gen Z than any other population. So we hear all the time, ‘Gen Z is fickle. They’re not loyal to brands.’ Well, they are, and we’re seeing that in our business.”
When it comes to Kate Spade, the clear second child in the Tapestry hierarchy, Crevoiserat acknowledges there’s work to do—and she’s hoping to revisit the Coach playbook in reviving the once-hot premium label for a new generation of shoppers.
“We need to acquire this young consumer, and we need to bring the consumer with us, and that’s not something that happens overnight,” she said. “So we are leveraging the brand-building capabilities you see in evidence at Coach, and we’re applying them to Kate. And as we’re making those investments, we are seeing returns. We’re seeing higher Gen Z customer acquisition, which is critical for our growth going forward.”
Asked about the failed merger with Capri that played out in a painfully protracted process ultimately foiled by antitrust laws, Crevoiserat said Tapestry is not looking backwards.
“As it relates to the Capri proposed merger that we had, we would have been great owners of those brands. These brand building capabilities that we’re building at Tapestry, I believe, are extendable to more brands. Unfortunately, that transaction was blocked,” she said.
The company is now focused on drilling down on Coach and Kate Spade. “I think the environment is volatile, just overall and globally, and our focus is to continue to build our current business. We have such incredible momentum at Coach,” she added.
Moving forward, the firm will continue to follow its north star: its shoppers. “We have to know and stay in touch with that consumer as all of these macro-economic changes impact consumers around the world differently,” she said. “Every day there’s a different story, and that will impact our consumers as well.”
