a rare thing,” said Neil Saunders, MD of GlobalData.  The robust results come at a time when many in fashion retail are trimming forecasts, citing inflation-fatigued shoppers, persistent supply chain costs, and geopolitical uncertainty. Tapestry’s continued momentum, then, is as much a signal of internal strength as it is a reflection of Coach’s transformation into a consumer-resonant brand for a new generation. The Coach comeback  Tapestry’s crown jewel is performing like one. Coach posted a 12.9 per cent year-on-year sales increase. It now accounts for the lion’s share of Tapestry’s earnings. Part of Coach’s third-quarter lift likely stems from anticipatory buying. According to Saunders, some consumers pulled forward purchases due to expectations of price hikes linked to looming tariffs. But beyond such one-off effects, Saunders argues, the brand’s enduring desirability is clear.  “The fact that consumers are prioritizing Coach bags during a time of disruption underlines the desirability factor the brand has created around its products – and this generally bodes well for performance,” he said.  Coach also benefits from geographic diversification. While many US-based brands have struggled with weakening demand in North America, Coach posted 9 per cent constant currency growth in the region, alongside a 35 per cent surge in Europe and a 4 per cent rise in Asia Pacific. A tale of three brands Yet for all of Coach’s momentum, Tapestry’s portfolio remains uneven. Kate Spade saw sales fall 12.8 per cent, following a 5.6 per cent decline in the same quarter last year.  While Tapestry has previously framed Kate Spade as a brand in transition, Saunders pointed to a lack of “coherence” in product assortment and weak narrative cohesion. “Individual products are not bad, but the assortment lacks coherence and there is an absence of good storytelling. The result is a somewhat lackluster proposition which, in this environment, is not good enough to drive sales,” he said.  “Basically, while Coach is a ‘must-have’ for many shoppers, Kate Spade is only a ‘kind of nice to have’. This needs to change if the brand is to swing back into growth.” Then there is Stuart Weitzman. Once envisioned as a strategic entry into the luxury footwear market, the brand has faltered year after year and posted a 17.6 per cent drop during the period.  Tapestry has now moved to divest the business, with a pending $105 million sale to Caleres expected to close this summer. It is a far cry from the $530 million Tapestry paid in 2015, but analysts see the exit as a prudent reset.  “We would prefer management time and expertise to be spent on the core drivers of growth rather than the sideshow of Stuart Weitzman,” Saunders remarked. Margin, markets and marco forces Even as it reshapes its portfolio, Tapestry has maintained strong financial discipline. Direct-to-consumer sales climbed 9 per cent, digital revenue rose in the “mid-teens” and global brick-and-mortar sales grew in the “mid-single” digits, according to the company. The broader macro environment, however, remains fraught. Tapestry has benefited from its diversified production footprint in Vietnam, Cambodia and India, which has limited its exposure to tariffs on Chinese-made goods. This week brought a welcome reprieve: in a surprise development, the US and China announced a 90-day pause on tariff escalations. Beginning Wednesday, the US will reduce tariffs on Chinese imports from 145 per cent to 30 per cent, while China will cut reciprocal duties from 125 per cent to 10 per cent. The agreement is likely to bolster sentiment across retail, particularly among larger consumer discretionary names like Tapestry. While the company had previously baked in tariff-related price increases into its forecasts, the de-escalation now serves as upside to margins, at least in the short term. “Tapestry is not all that exposed to tariffs,” Saunders said. “Most of its production is based outside of China – across Vietnam, Cambodia, the Philippines, and India – which means it is largely unaffected by the imposition of onerous China tariffs.”  “The general 10 per cent rate which has been applied is something the group can broadly take in its stride. The downside risk comes from the potential reapplication of higher reciprocal tariffs after the current 90-day pause expires. These would be far more disruptive and dilutive to sales and profit,” he added.  Beyond 2025: A strategic crossroads Looking forward, Tapestry appears poised to exit fiscal 2025 on strong footing. The company expects full-year revenue of $6.95 billion, earnings per share of approximately $5.  “There are some risks for Tapestry, but all of these are from external factors that will impact all of retail,” said Saunders. “Within this, we feel Tapestry is in a much better position to cope with and manage any slowdown, including from the fact that it continues to steal shares and acquire new customers at Coach.”  Further reading: The thinking behind Coach’s partnership with women’s basketball.