Chipotle Mexican Grill and Coach store logos.
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Chipotle and Cava pinned weaker sales on younger customers who are pulling back and packing lunches.
But Gen Z shoppers are still spending on Coach handbags to bring to work — even if they’re skipping bowls and burritos.
Coach’s parent company Tapestry raised its full-year outlook Thursday, after beating Wall Street’s expectations for quarterly earnings and revenue and posting double-digit sales gains in North America.
In an interview with CNBC, Tapestry CEO Joanne Crevoiserat said the company’s sales in the quarter were fueled by attracting new customers, particularly within Gen Z.
The company, which also includes Kate Spade, acquired over 2.2 million new customers globally in its fiscal 2026 first quarter, driven by growth in Gen Z consumers compared to the prior year. The company said that generation, which is typically defined as spanning in age from roughly 13 to 29, accounted for about 35% of new customers.
“The Gen Z consumer, specifically, is highly fashion engaged, spending slightly more of their budget on fashion,” she said.
Blurred pedestrians walk past an illuminated Coach New York logo at a storefront in a shopping mall, on June 23, 2025 in Chongqing, China.
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She added those younger customers have a high retention rate, “maybe busting a myth that these customers, Gen Z customers, aren’t sticky or loyal.”
Here’s what the company reported for the fiscal first quarter compared with what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: $1.38 vs. $1.26 expected
- Revenue: $1.70 vs. $1.64 billion expected
Tapestry’s net income in the three-month period that ended Sept. 27 rose to $274.8 million, or $1.28 per share, compared with $186.6 million, or 79 cents per share, in the year-ago period.
It hiked its full-year outlook for both sales and profits, saying it now expects revenue around $7.3 billion for the year, which would be 4% or 5% growth from the prior year, compared to its prior expectations of nearly $7.2 billion. For earnings per diluted share, it now expects a range of $5.45 to $5.60, higher than its prior guidance of $5.30 to $5.45.
Despite the raised forecast and better than-expected quarterly results, Tapestry’s shares fell about 9% in premarket trading.
With its Gen Z strength, Tapestry defied some other companies’ assessments on the health of younger shoppers.
Cava saw demand among the 25- to 34-year-old consumers fall as the fast-casual chain entered its current quarter, CFO Tricia Tolivar said in an interview with CNBC. She attributed a pullback to younger diners’ higher unemployment rate, their greater likelihood of facing the student loan repayments that resumed in the spring and tariffs creating “an overall fog for the consumer.”
Chipotle’s CEO Scott Boatwright similarly said the chain is seeing younger diners visit less frequently, especially those between the ages of 25 and 35 years old.
And some holiday forecasts have also reflected a predicted drop in spending by Gen Z. According to consulting firm PwC’s holiday survey, Gen Z plans to cut average holiday spending the most among generations surveyed compared to the year-ago period — with respondents in that age group saying they plan to spend 23% less.
Deloitte found a similar trend, with Gen Z consumers saying in its separate survey that they plan to spend an average of 34% less this holiday season than a year ago. Weakness carried into the next oldest generation, as millennials — respondents between ages 29 and 44 in the poll — said they expect to spend an average of 13% less this holiday season.
— CNBC’s Amelia Lucas contributed to this report
