Good morning. New York City-based Tapestry, Inc., parent of luxury brands Coach and Kate Spade New York, is executing a three-year strategy focused on profitable growth and strong shareholder returns.
The “Amplify” strategy is anchored on four pillars: building emotional connections with consumers (especially Gen Z), advancing fashion innovation, delivering compelling global experiences, and fostering an agile, consumer-focused culture.
These priorities build on proven strategies, especially at Coach, according to CFO and COO Scott Roe, who spoke with me on Tuesday ahead of the company’s investor day.
Millennials and Gen Z are increasingly choosing Coach, driving a beat for the quarter that ended June 28, fueled by these demographics. “By 2030, Gen Z and millennials will make up over 70% of the market,” Roe said. Tapestry aims to capture their first luxury purchase.
“The long-term value of acquiring customers at this initial entry point is substantial,” he said. “While others talk to millions, we’re talking to billions of potential consumers.”
In the same quarter, Tapestry reported a non-cash impairment charge of $855 million related to Kate Spade and a 13% revenue decline for the brand, Fortune reported. Despite this, having achieved previous goals, the company is confident its strategy can drive future growth for both Coach and Kate Spade, Roe said.
Tapestry plans for Coach to deliver mid-single-digit annual revenue growth (CAGR) and expand its operating margin to the mid-30% range over the next three years, with a longer-term goal of reaching $10 billion in annual revenue.
And the company expects Kate Spade to return to profitable top-line growth in Fiscal 2027 and target mid-single-digit revenue growth and high single-digit operating margin by Fiscal 2028.
“Scale and investment in marketing have never been more important,” Roe emphasized. “There are no barriers to entry in our category, but significant barriers to scale.” Over the past three years, Tapestry’s marketing investment has grown from 3.5% to more than 11% of revenue, with plans to increase it by another 200 basis points.
Tapestry plans to return $4 billion to shareholders by fiscal 2028, representing 100% of adjusted free cash flow from FY26 to FY28, even after capital expenditures, Roe said. The business now operates at a sustainable mid-single-digit growth rate, driven by a self-reinforcing model focused on quality growth and margin expansion, he said.
This performance enables significant reinvestment in the business, resulting in robust earnings and cash flow, Roe said. Capital allocation priorities include growing the dividend (targeting a 30% payout ratio) and a recently authorized $3 billion share repurchase, returning all free cash flow to shareholders.
“This is a powerful message that truly reflects our conviction in the future,” Roe said.
SherylEstrada
sheryl.estrada@fortune.com
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Fortune 500 Power Moves
Ranjith Roy has been promoted to CFO of Yum! Brands (No. 491), the parent company of household-name brands including KFC, Taco Bell, and Pizza Hut. Roy is taking over from Chris Turner, promoted to CEO, effective Oct. 1. Roy joined Yum! in 2024 as chief strategy officer and treasurer, overseeing strategy, mergers and acquisitions and treasury operations. Before joining Yum!, he served as CFO of the e-commerce marketplace Goldbelly, where he helped scale operations. He also spent more than 15 years with Goldman Sachs, where he led investment banking relationships for restaurant, food and food tech businesses, building industry expertise.
Roy brings to the CFO role a “blend of commercial acumen, strategic insight on Yum!, and the restaurant industry,” Turner said in a statement. “He has a proven ability to navigate fast-paced and complex environments with a sharp focus on long-term value creation.”
Every Friday morning, the weekly Fortune 500 Power Moves column tracks Fortune 500 company C-suite shifts—see the most recent edition.
Big Deal
CFOs are grappling with the volume and pace of AI developments in corporate finance, according to Gartner Inc., a business and technology insights company.
Gartner's research finds three areas stand out as having the potential for transformational impact while reaching mainstream adoption within two years: Generative AI in finance, composite AI and responsible AI.
“The pace and potential of AI developments in finance can be overwhelming,” Alex Levine, director analyst in the Gartner Finance practice, said in a statement. “The AI in Finance Hype Cycle aims to help finance leaders cut through the noise and focus on technologies likely to have the most impact in the near-term.”
Below is Gartner's Hype Cycle for AI in Finance, 2025
Going deeper
"Workday’s CEO says his career took off after he changed his attitude—and Amazon boss Andy Jassy swears by the same mindset hack" is a Fortune report by Preston Fore.
From the report: "$62 billion Workday CEO Carl Eschenbach reveals Gen Z’s career success won’t come from chasing titles or padding resumes—but by shifting their mindset. Instead, he says Gen Z should double down on attitude, authenticity, and relationships to thrive in an AI-disrupted workplace." You can read the complete report here.
Overheard
“It really helped me through some difficult times, being diagnosed with ADHD, and helping me kind of slow down my thoughts and be more strategic.”
—Veteran NFL wide receiver Larry Fitzgerald Jr., an investor in Chess.com, said on Tuesday during Fortune’s Brainstorm Tech conference in Park City, Utah, that chess had a formative influence on his youth and helped him manage the challenges of attention-deficit/hyperactivity disorder. He learned the game from his father, who played on both the Indiana State University chess and football teams, Fortune reported.
