00:00Generation Z. For retailers, they are young and desired, but demanding and frequently misunderstood.
00:08Roughly between the ages of 14 to 29, the demographic makes up close to a quarter of the global population.
00:15And by the year 2030, we'll have the largest economic footprint of our lifetime.
00:20So figuring out what they want isn't just academic, it's the difference between obsolescence and prosperity.
00:28Few established brands seem to have cracked the code as well as Coach.
00:33Founded in 1941, it was all the rage with boomers and Gen Xers in the 80s and 90s before becoming
00:40just a bit too ubiquitous, a bit too everything.
00:43And falling out of favor with the younger millennials who began dismissing Coach as their mother's brand.
00:50Stuart and I, many years ago, recognized, among other people at Coach as well, that we were too much often
00:58considered a brand for everyone and hence a brand for no one.
01:01And we became extraordinarily focused on Gen Z.
01:06Todd Kahn, the CEO of Coach Brand, is referring to Stuart Beavers, his creative director, and they're joined at the
01:14hip quest to win over and retain the holy grail of Gen Z.
01:19And that quest, it's paying off.
01:21We brought in 2.9 million new customers in our last quarter, the holiday quarter.
01:26So these are people that had never purchased a Coach.
01:29Coach, I think we're bringing new people into the category.
01:32I think sometimes we used to talk about share of wallet.
01:35I think our share of wallet has been enhanced because of the compelling nature of our product.
01:41All told, Coach delivered brand revenue growth of 25% for its parent company, Tapestry, in the quarter ended in
01:48December 2025.
01:50That was the fifth straight quarter of double-digit percentage gains, a streak the brand hadn't seen in years.
01:56And people, they're taking notice.
01:59To walk into a Coach store in one of our shopping centers and see it packed with younger consumer is
02:06really inspiring for us as owners of shopping centers.
02:10What Todd is doing is really, as a leader of that particular brand, is setting us all up as owners
02:17of shopping centers for great success.
02:19It's not by accident.
02:21Lou Frankfurt, who is credited with taking Coach from a small, local leather goods company with just $6 million in
02:28sales in the late 1970s to a multi-billion dollar global juggernaut by the time he stepped away as CEO
02:34in 2014.
02:36He talks pointedly about some of the mistakes made in the 2000s that led to Coach losing its cachet.
02:43One of the things that legacy brands can do is they can withstand bad strategies or mistakes.
02:50And it took 10 years after my departure for Coach to be restored and surpass the height that we realized
03:00when I was there.
03:01And clearly, Stuart and Todd are great stewards of the brand.
03:06It doesn't hurt to have brand ambassadors curated from the coolest of the cool.
03:11Ad campaigns with Lil Nas X, Selena Gomez, Megan Thee Stallion.
03:15And wait, was that Bella Hadid walking down the street with a vintage Coach hobo bag?
03:20Keeping that buzz going, though, it's tricky.
03:22According to Frankfurt, pay attention to what your customers are saying.
03:26Always ask.
03:27Never assume.
03:28Coach has been here for 85 years.
03:31And I started with Coach 45 years ago.
03:35So I've seen generation change.
03:38And Gen Z is the generation that's most similar to my generation, the 60s.
03:45They're very value driven.
03:47They're concerned with climate.
03:48They're concerned with authenticity, truth, being who they are, relationships.
03:55More so than just the size of this demographic, it's their spending habits that are drawing the focus of Coach
04:01and other brands.
04:02A study by Morning Consult found that in the past year, Gen Z spending has risen almost 20% on
04:09non-essential goods like clothes and beauty products.
04:22And despite having been birthed into an online one-click world of e-commerce, sometimes they just want to physically
04:29go into the store and touch that leather.
04:32Coach, historically, has been known for the quality of leather.
04:37And that goes back to the origin story of the company.
04:40Their tanneries are the best among their quality of the input.
04:44And I think that the consumer today is actually very, very smart and intelligent about what they're getting.
04:51They're also looking to make shopping an event.
04:54Many Gen Z will tell you they love experiences just as much as you love experiences.
04:59The difference, I think, is they're very, very thoughtful about their purchases.
05:05Sometimes people talk to me a lot about, wow, people are shopping in the real world again.
05:11And they're going to malls again.
05:13Malls are alive and thriving.
05:17That's led Coach to focus on not just what it sells, but how it sells it.
05:23There are the brand-new leather bags to touch and feel, of course.
05:26But you can also bring in, well, your mother's used Coach bag and have it refurbished and adorned in-store
05:32as part of Coach's re-loved program.
05:34Or maybe you pop into the company's Coach-topia concept and pick up a purse made from upcycle production waste.
05:42And then there's the coffee shop.
05:45Yes, coffee.
05:46Lee Manaheim Levine, Coach's North American president, sees coffee and these little tabby-shaped cakes as a potential driver of
05:55handbag sales.
05:56We see customers while they're waiting for their drink or they buy a drink and they're browsing.
06:01Maybe they didn't intend on buying something today, but they do.
06:04Or they were exposed to the brand.
06:07Maybe they wouldn't have had an intention of coming in to Coach, but they came to buy a coffee.
06:11And now they're walking around and seeing something.
06:14And that speaks to a larger, overarching mission.
06:17The evolution from Coach's affordable luxury ethos of days past to what it now calls expressive luxury.
06:25They've carved out their own niche, right?
06:28And so, yes, it's aspirational, but it's also accessible to a broad swath of the population.
06:34And as for Coach's relatively affordable price point, Todd Kahn, he's very blunt about holding that line.
06:41No one needs our category.
06:43You can carry your stuff in a paper bag.
06:45You can carry your stuff in a $50,000 pack.
06:47You have seen some of those European handbag makers raise their prices that maybe that's given you a little bit
06:54more room, especially when it comes to that $200 to $500 range to bump up your prices as well.
07:00I find it offensive that somebody has to save four months of salary to buy a handbag, okay?
07:05That's not a business I want to be in.
07:07I love that you can walk into a Coach store anywhere in the world and buy something compelling.
07:15And you don't have to make the choice of missing out on something you would have saved her for four
07:21months.
07:21That's powerful to me.
07:23It's a strategy resonating with their now core Gen Z customer.
07:29This is Brooklyn.
07:30This is one of the bags for Gen Z.
07:35She loves it.
07:36It's at an incredible price at $295, which really sits in that sweet spot for our young customer.
07:42And even though we sell a lot of units of this bag, she has the opportunity to buy her charm,
07:48buy her strap, make it her own, and really customize it.
07:51Bag charms are another way the brand is connecting with Gen Z and their desire for self-expression.
07:58The cherry charm, which is one of the charms that we're most famous for, is $95, so more accessible than
08:04$295.
08:06But I think why she loves it is the idea that she co-creates that item.
08:13For now, much of Coach's Rebound has been domestic.
08:16International sales growth, it's still in the single digits.
08:20But Wall Street analysts, they expect that growth rate in 2026 to accelerate into the double digits for the first
08:27time in years.
08:29It's an international expansion, years in the making.
08:32Over the next three years, we think we'll add about 100 stores in China, and that may be the number,
08:37give or take.
08:39And part of it is China's so vast, and there's so much opportunity to go into places that historically Coach
08:47didn't go into.
08:49But it's not just China.
08:50Coach has their sights on growing everywhere around the globe.
08:54I do want to talk a little bit about Europe, because you mentioned your growth there, and I wonder, you
08:59know, who are you necessarily taking share from?
09:03Because you think about the European luxury handbags, have to imagine they have a huge presence.
09:08You actually, you know, taking a little bit of their slice of the pie, or is the pie growing?
09:12We grew the category.
09:14We have a very strong business in England.
09:16We have a nice business in France.
09:18We're starting to expand both digitally and through our wholesale channel.
09:23Now, as the brand looks ahead to the future, they're focused on continuing to build an emotional connection with their
09:29customers for generations to come.
09:33I've been a coach for 18 years.
09:35I can't tell you the number of times I've heard somebody say, my first bag was a coach bag.
09:40My memory was a gift, self-purchase, something that inspired me.
09:46When we can create that kind of goodwill, I think we have them for a long period.
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