Bloomberg Talks
Coach President & CEO Todd Kahn Talks Focus on Gen Z, New Customers & Power of Pricing
18 Feb 2026
Chapter 1: What is the main topic discussed in this episode?
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Todd, it's great to see you here. We're in Coach House right here on Fifth Avenue in New York City to really talk about what I guess has become a bit of a revival for the Coach brand itself. Sales have taken off, sales growth, I should say. And a lot of that has to do with the laser focus that you and your team have put on Generation Z and their shopping habits.
And I wonder if you can maybe start off by just talking a little bit about what exactly you learned about what they wanted.
Well, thank you, and thank you for joining me in Coach House. We love having you here. It is our home. It's our global flagship, and it's probably the best representation of the brand. So come visit. That's the quick editorial. No, we focus very much on trying to figure out Gen Z. I often say we're an overnight success story six years in the making. And
Stuart and I, many years ago, recognized, among other people at Coach as well, that we were too much often considered a brand for everyone, and hence a brand for no one. And we became extraordinarily focused on Gen Z. And part of our focus was listening, learning, doing a lot of sometimes what I call big data and little data. Big data is we're a direct-to-consumer business.
We have millions of customers. We have a lot of data from them. Little data is sometimes going into people's houses, doing shop-alongs with them. They don't often know what brand, which brand they're speaking with. and listening to them. And we gain real insight from them. And so what I often say is, I don't want to supplant the gut of our creatives. I just want to create an informed gut.
So that's what we're doing. And that's what you're seeing working.
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Chapter 2: What insights does Todd Kahn share about Gen Z shopping habits?
There was a great line by your predecessor, Lou Frankfurt, who ran Coach as a company for years, who talked about the idea of never assume, always ask. And I am curious about the balance between asking the consumer what they want and just looking at the hard data. What is sort of the line where those two intersect?
That's such a powerful place to talk. Lou's a mentor, a dear friend. I had the opportunity to be hired by Lou. I worked with him for many years. He's still somebody I talk to often. We launched his book party. at Coach when it first came out. We talk a lot about balancing logic and magic, and that's the art. You want to hear from the consumer, but I don't want the consumer to create a back, okay?
We'll get their input, we'll co-create with them. But we have an amazing creative director, amazing designers and merchants. I want them to be informed. But ultimately, I don't want to outsource our commercial judgment or our business judgment or our creative judgment. And finding that balance is where the magic takes place.
I think that's really interesting because it sounds like basically you're saying that you don't want to be too reactionary. You think about fashion, you think about handbags, and this is actually a conversation we've had with Lou.
How much of it is being that tastemaker, trying to anticipate where the trends are going to go versus following the logic, following the data and seeing what is resonating with Gen Z, for example?
Yeah, so what we do, again, Lou said it, we have to remain curious. Also, what I often talk about, we have to remain humble. We don't have all the answers. We have a sense of where fashion is going. We pick up cues. Our creatives, our designers, our merchants are shopping the streets of Shanghai, of Tokyo, of New York, of LA, and seeing and listening to trends. We are not just following trends.
If you're just in the following trend business, you're not really a significant fashion house. So we're listening to what they like. We understand there's functional needs and Coach, I will say in our 85 year history, excel at having an incredibly high functioning bag. What draws you to our category, no one needs our category. You can carry your stuff in a paper bag.
You can carry your stuff in a $50,000 bag. Of course, there's material differences, but ultimately, it's an emotional purchase. We want to make sure our bags talk to the person, connect emotionally with them. And that's what we do. I think when we do it well, we're doing it our best.
Well, you mentioned that global perspective, and I do want to bring that back to the conversation around Gen Z, since that's a nut that many are trying to crack. You think about Gen Z, and it seems like looking at their shopping trends, that it's much more about items.
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Chapter 3: How does Coach gather data to understand consumer preferences?
a social event. Today you'll see, you'll come into a Coach store, you'll see Gen Z shop, they'll be with their friends or they'll quickly be on their phone showing their friends the bag they want. Mostly they've already come in with a great understanding of what it is they want and then they focus a little bit more when they're here.
But with regards to that connectivity, particularly on a global basis, as Katie alluded to, I assume to a certain extent that makes your job a little easier. But I'm also wondering if that also raises the risk that if I see Coach over every social media platform, TikTok and Reels and everything else, at some point, does it become saturation, even if that's not the reality?
Yeah. So one of the issues is, and our investors talk about this all the time, fear of ubiquity. What I love in this last quarter, we grew 25% top line. No single family accounts for more than 10%. So the platforms we have to create different self-expression, which is really our goal, to inspire Gen Z for their full expressive self. We have the Tabby family. We have the Terry family.
We have the New York family. I call it TNT, which leads to explosive growth. Those three platforms alone are magnificent, not even talking about some of our traditional platforms like Signature C. Right now we're having a moment of a Y2K moment. You probably see that trend back to that era, which obviously something that we love because it was one of the
probably the original heyday of Coach, now we're in a new heyday of Coach. So I feel very good about the number of ways you can engage the brand. The other thing we're very focused on, because we're focused on Gen Z, and we're particularly focused actually very soon on Gen Alpha, point of market entry. We want to be her first back.
When I think about in those terms, there are 25 million women who will turn 18 every year in the markets we play for the next five years. That's a massive TAM that we want to be their bag of choice.
Well, we'll talk a little bit about that TAM and the expansion of it. 25% growth for any company is not necessarily going to be stable long term. I mean, that's a phenomenal growth rate. Maybe it is. You can tell me different. No, it's a phenomenal growth rate. But the new customers you're bringing in now, how much can you count on them to be customers 10 years from now or 20 years from now?
And for that matter, their children or grandchildren to be customers as well. Is that something you're factoring in to this total addressable market?
So a couple things. We brought in 2.9 million new customers in our last quarter, the holiday quarter.
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Chapter 4: What is the balance between consumer feedback and creative intuition?
Oh.
It's New York. I'm surprised it took this long. Katie, we'll take the question again, too, when that goes by. Okay. Hold on one second.
I hope it's okay out there, whatever's happening.
Yeah, that was minor. Fire away.
Speaking of new customers, you mentioned Gen Alpha. And Gen Alpha, I don't have the exact stats, but I believe we're talking about teenagers and below. So how do you go about even reaching them? Because they're spending their parents' money in a lot of cases. It's not like Gen Z, which a lot of them have jobs at this point.
So how do you target them and how do you start to go about building brand loyalty with that cohort?
Well, first, as a father of a Gen C-er, they still spend their parents' money. The bank of mom and dad is real. Fair enough. But beyond that, we're learning about Gen Alpha now. So depending on who you talk to, Gen Alpha turns 18 in 2027, 2028. We're engaging, we're learning, we're understanding them.
And yes, they will spend some of their parents' money, but what's interesting about both Gen Alpha and Gen Z, particularly Gen Alpha now, they all seem to have a side hustle. You know, we used to say when I was younger, you know, you babysit or, you know, maybe you got to work like I did in my parents' shop cleaning the counters. They are micro-influencers. They do all these things in the...
internet and digital economy that is so interesting. And they're very, one thing we've already heard, and some of this could be AI related, not only are they tech savvy, but they're kind of business savvy too. And that's true for young Gen Z. So we like that about them and we're learning about them. And one of the things that is so powerful about Coach, we stay in the sweet spot of two to $500
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Chapter 5: How does Coach differentiate itself in the luxury market?
It seems like we've settled at least for right now. And I mean, on your side as well, higher tariffs, that's hitting consumers. And I have to imagine it's hitting your supply chain as well. So what is pricing power look like right now? And how is that translating to margins going forward?
Yeah. We announced in our holiday quarter the best margin in our history. And we're focused on that, but it's a balancing act. We love the sweet spot, as I said earlier, of the $200 to $500 range. There's a lot of room there. If I discount less at the bottom end, I raised my overall margins substantially. So we're not looking to do what some people did, take price
three, four X what it was four years ago. I don't need to do that. We want our job and our mission is sustainable, healthy growth. So we should keep up with inflation. That should be your starting place. And then there's things that the consumer values. So we compare our product, our inputs, And we look at how the consumer perceives value.
And there are certain classifications and materials that the consumer sees value in. And we take a price accordingly. But we're very sensitive to having... price points that work for our core timeless Gen Z customer.
On the issue of cost, I mean, have you ran into any issues as of late with regard to being able to source your leather, whether it's because of tariffs or the cattle shortage we hear about, or even just the idea that, you know, the people, the expertise and being able to tan leather is the number of people who can do that these days is a lot different than what it was when you guys were founded in 1941.
Yeah. So fortunately, we're a substantial house. We have deep resources. We started as a manufacturer. So we still have a manufacturer mindset. We have leather experts in our company. We source leather from around the world. We work with the best tanneries. Our units are significant. So people want to work with us. So we do get... the choice to get what's the best out there.
We have not seen an issue with our leather suppliers, nor have we seen an issue with our make manufacturers. We are making coach product with some of the same people we've made for 20 or 30 years. We have very deep relations. Of course, tariffs are an issue. But one thing about our company that...
bear you need to bear in mind we see in the next three years seventy percent of our growth coming from international so when I'm selling internationally tariffs are no longer in play. Now, we've had phenomenal growth in North America. Last quarter, we did 27% top-line growth in North America. That's phenomenal. We also saw 37% growth in Europe and high 20% growth in China.
So we had substantial growth across the world. That takes the tariff issue out of play.
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