Coach Is Hitting the Right Price Point-Heard on the Street -- WSJ

Dow Jones05-08

By Jinjoo Lee

Expensive handbags have been a tough sell lately for Europe's luxury behemoths. But Coach's results show that consumers are still buying luxury goods-at the right price point. Despite a selloff in its shares on Thursday, the company is on the right track.

Coach owner Tapestry, which also owns Kate Spade and Stuart Weitzman, on Thursday reported that sales at its flagship brand rose 29% on a constant currency basis in its quarter ended March 28 from a year earlier. That was well above the 19% growth analysts polled by Visible Alpha had expected, and marks the sixth consecutive quarter of double-digit constant currency growth for Coach. It is also a stark contrast with European luxury brands, which reported weak sales.

Coach is still benefiting from European luxury brands' excessive price hikes, says Simeon Siegel, equity analyst at Guggenheim Securities. Coach has been raising its prices, too, but its signature bags still remain well below the cheapest ones sold by the Europeans. The Tabby shoulder bag goes for $450, while the Brooklyn bag is priced at less than $300. By contrast, Louis Vuitton's cheapest bags sell in the $1,500 range, while Gucci's smallest bags go for about $800.

It also helps that the company is splurging on marketing: It spent 50% more last quarter on marketing compared with a year earlier. Marketing now represents about 12% of sales, up from 3% to 4% historically.

Tapestry shares have soared over the past year. Before Thursday's results they were trading at a similar multiple to LVMH at around 20 times forward earnings.

That high price might be one reason why investors pulled back today despite blowout earnings. Tapestry shares rose 5.3% yesterday in anticipation of strong results, and then fell about 12% today. Luxury-tier multiples come with lofty expectations.

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May 07, 2026 12:15 ET (16:15 GMT)

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Coach Is Hitting the Right Price Point-Heard on the Street -- WSJ

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