Ultra-luxury brands, such as LVMH Moet Hennessy Louis Vuitton (CBOE: MC) and Gucci owner Kering (CBOE: KER), have suffered in recent years, as consumers have rejected their sky-high prices.
But affordable-luxury purveyor Tapestry (NYSE: TPR), led by its 85-year-old Coach brand, is doing just fine. Coach sells primarily women’s handbags along with other accessories. Tapestry’s smaller Kate Spade division also provides ladies purses. Coach accounts for about 85% of the company’s revenue.
While the average price of a Coach bag totals about $400, according to Morningstar, Louis Vuitton bags average $2,00-$3,500, according to artificial intelligence sources. A $450 Coach bag, Tabby, is all the rage, especially among Millennial and Gen Z women. Celebrities like Jennifer Lopez, Bella Hadid, and Laura Harrier are customers.
Coach’s sales soared 25% in the quarter ended Dec. 27 from a year earlier.
So it’s no wonder that Tapestry’s shares are crushing it. The stock has soared 99% over the past 12 months and 252% over the past five years. It easily beat LVMH, Kering and the S&P 500 over those periods. It also outgained them over the last 10 years, enjoying a rise of 261%.
Brand of distinction
With a range of classic styles in its bags and other products, Coach has turned itself into a brand of distinction for women seeking luxury at an affordable price.
“We view Coach as the category leader in the mass premium handbag market,” wrote Morningstar analyst David Swartz. “Women see it as a prestige brand and are willing to pay more for its bags despite the widespread availability of competing products.”
Morningstar looks at four main factors for luxury companies: pricing power, conspicuousness of consumption, control over distribution, and investment value (the value of the products as investments).
Compared with other luxury brands, Swartz rates Coach’s control over distribution as high, investment value as low, and the other two factors as moderate. “It is one of a small number of American brands viewed as a leader in the luxury space,” he said.
On the pricing front, while Coach charges its customers much less than European luxury companies, its handbags are generally more expensive than its competitors in the accessible luxury market. That allows for higher profit margins, Swartz points out.
Coach has garnered a 75% average gross profit margin over the past five years, and he forecasts an average of 76% for the next decade. “Coach attains high gross margins in a crowded category, because consumers view its products as high-quality and fashionable, [making them] willing to pay extra,” he said.
Second-place market share
In 2025, it had a 13.9% share of the U.S. luxury handbag market, trailing only LVMH, according to Euromonitor.
Coach also is expanding overseas, selling in about 60 countries. Sales outside North America climbed to 40% of total revenue in fiscal 2025 from 28% in fiscal 2011. That’s thanks to organic growth, store openings, distributor acquisitions, and reduced North America distribution, Swartz said.
Coach makes 87% of its sales directly to consumers through its more than 900 stores and e-commerce. That gives the brand strong control over pricing, inventory, and marketing, he noted.
Kate Spade, which accounts for 15% of Tapestry sales, is its poor stepchild, suffering from heavy discounting and market saturation. The unit’s sales fell 14% in the latest quarter from a year earlier, compared to Coach’s 25% increase. But Swartz thinks Kate Spade will ultimately recover.
In any case, Coach’s version of affordable luxury looks like a winner going forward.
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