Why Coach is Gen Z’s go-to affordable luxury handbag brand

(SeaPRwire) –   Style-obsessed shoppers worldwide are increasingly drawn to an 85-year-old handbag icon. This month, Tapestry reported that its flagship Coach brand achieved a 29% sales increase in the last quarter—a growth rate envied even by new brands. Notably, Coach’s appeal among Gen Z consumers is central to this success.

Founded in 1941 as a producer of wallets and billfolds in New York, Coach has evolved into a dominant force in handbags and leather goods. The brand has gained popularity with younger shoppers who desire stylish, well-crafted bags bearing a recognizable name but cannot afford luxury giants like Hermès or Louis Vuitton. Most Coach handbags retail between $300 and $700, significantly below top-tier luxury prices—allowing customers to purchase multiple bags within budget.

“We offer aspirational design, fashion, and quality, yet remain highly accessible in price,” said Todd Kahn, CEO of the Coach brand, during last week’s investor briefing. In the quarter ending March 28, Coach recorded $1.7 billion in sales. Meanwhile, LVMH’s fashion and leather goods division saw a 2% decline in the same period. Coach also outperformed direct competitors: Michael Kors posted a 5.6% drop in sales last quarter. The brand’s momentum is especially strong in China, where it has operated since 2009; revenue there surged 55% year-over-year in the latest quarter, excluding currency effects. Similar growth is evident across other parts of Asia.

Kahn credited much of the brand’s success to its $1 billion annual investment in marketing and data analytics, enabling deep insights into customer preferences and timing. He described this substantial spending as a “Coach-onomics flywheel” that continues to drive sales growth. UBS recently raised its price target for parent company Tapestry, citing its leadership in applying artificial intelligence to customer intelligence.

GlobalData estimates that Coach has added 800,000 new Gen Z customers compared to last year—a surge attributed to the brand’s targeted marketing strategy, which reflects the aesthetic sensibilities and needs of young consumers.

Coach has effectively tapped into young shoppers’ desire for vintage-inspired yet contemporary brands known for quality—a formula that has similarly propelled Ralph Lauren’s luxury image and sales to record highs in recent years. Both Coach and Ralph Lauren share key parallels in their transformation journeys. A decade ago, each faced declining fortunes after years of overexpansion, excessive presence in failing department stores, and heavy reliance on outlet sales that undermined their upscale appeal. They addressed these issues by closing underperforming stores, reducing department store partnerships, cutting back on discounts, and reemphasizing heritage and quality—efforts that revitalized both brands and set the stage for sustained sales growth.

Today, Coach stands at an all-time high: a decade ago, it was valued at $4.1 billion and struggled to break the $5 billion mark for years, but growth accelerated dramatically over the past two years. For the fiscal year ending next month, the brand’s revenue is projected to reach approximately $7 billion.

However, success with one brand does not ensure success with another. Within Tapestry’s portfolio, Kate Spade continues to decline, with sales down 11% last quarter. At present, Coach accounts for 89% of the company’s total sales. Tapestry was established in 2017 when former Coach Inc. set out to build a luxury brand portfolio—an ambition that has yet to materialize. Last year, the company sold its high-end women’s shoe label Stuart Weitzman. The prior year’s attempt to acquire Michael Kors’ parent, Capri, was blocked by antitrust regulators.

Luckily for Tapestry, Coach’s momentum remains unstoppable. Kahn expressed confidence that this trend will continue: “We can add millions of new customers every quarter for the next decade and barely scratch the surface.”