Coach continued to push Tapestry Inc. to new heights in the fiscal second quarter — prompting the company to solidly boost its outlook for the full year. 

The handbag brand — which invented the term “accessible luxury” 25 years ago, but lately has been moving upscale — grew sales 25 percent to $2.1 billion for the three months ended Dec. 27. 

That pace was not matched by its younger sibling, Kate Spade, which is still in the midst of resetting its operations and saw sales fall 14 percent to $360 million, in line with management’s expectations. The much smaller Stuart Weitzman business was sold off in August to Caleres.

Despite the declines at Kate Spade, it is Coach that serves as the center of gravity at Tapestry and it’s that brand’s growth that’s falling to the bottom line.

Tapestry’s net earnings rose 81 percent to $561 million — while adjusted earnings per share were up a milder, but still very strong 34 percent to $2.69. That’s 46 cents above the $2.23 Wall Street analysts had penciled in, according to Yahoo Finance.

Total revenues rose 14 percent to $2.5 billion, or 18 percent growth on a proforma basis, which factors out Stuart Weitzman sales from the year-ago period.

Pro forma constant currency sales were up 17 percent in North America, 22 percent in Europe and 18 percent in the Asia-Pacific region.

Investors have come to expect growth from Tapestry and over the past year have sent its shares up over 78 percent, giving the company a market capitalization of $26.9 billion — one of the highest valuations in fashion. 

Tapestry is now looking to give back a little more. The company said it expects to return $1.5 billion to shareholders through dividends and share repurchases this fiscal year, up $200 million from previous projections. That investment represents about 100 percent of the company’s anticipated adjusted free cash flow. 

Wall Street will have a chance to weigh in on the latest results and the sweeter givebacks when the market opens, but the story hasn’t really changed at Tapestry.

In an interview with WWD, Joanne Crevoiserat, chief executive officer, said the company is looking at the long term and thoughtfully running its playbook.

“This is what we’ve designed for, this is who we are,” Crevoiserat said. “We are operating with discipline in a structured way. We’re building strong growth and it’s healthy growth, and we’re investing for a future as we’re building this growth.

“We’re also having some fun,” she said. “We’re fueling a culture of creativity and innovation and our teams are really inspired and excited by our progress.”

Fun is easier when one is winning. 

Crevoiserat said Todd Kahn, CEO and brand president of Coach, describes it as “an overnight success, five years in the making.”

“We’ve been disciplined in building these capabilities over time and we continue to lean into the capabilities that we are building,” Crevoiserat said. “It starts with being consumer obsessed, really understanding our target consumer and then taking that consumer understanding and embedding it in everything we do. Taking those insights and moving to action, action in the product that we’re developing, in the experiences that we’re delivering to these target consumers and its excellence in execution around the world.”

Tapestry is successfully doing less with more.

“We cut back in the days of the pandemic — 40 percent of our assortment, the tail of things that weren’t productive,” Crevoiserat said. “And we’ve gotten more disciplined by making the products that we are developing standing behind them with more conviction, with more investment behind marketing.”

The more muscle, less fat effect can be seen in the company’s margins. 

Gross margins totaled 75.5 percent of sales during the quarter, up 110 basis points from 74.4 percent a year earlier — and in a year where President Donald Trump’s new tariff regime basically caused a supply chain tsunami.

Scott Roe, chief operating and financial officer of Tapestry, said: “We have every quarter now improved on our gross margin performance. And we’re now at a position where we’re growing gross margins. And that’ll be true not just this year, but our expectation is next year and beyond that we can continue to fully mitigate the impact of tariffs and grow our gross margin. And that’s been an important part of our flywheel or our financial algorithm, accelerating top-line growth margin, gross margin improvements, invest back in the business.”

For the full fiscal year, Tapestry expects revenues to grow by 11 percent to $7.75 billion. Earnings per shares are slated to rise over 25 percent to $6.40 to $6.45 — easily topping the $5.45 to $5.60 previously forecast.