Coach Is Closing 70 Full Price Stores

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G

Girl_LV

Member
May 7, 2014
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#1

Coach benches 70 stores in North America

http://fortune.com/2014/06/19/coach-store-closing/


Luxury retailer is closing 20% of its stores to try to stop its market share loss to Michael Kors, will concentrate on 12 key markets.


Coach’s COH -8.32% gravy train kept-a-rollin’ for decades, as the New York handbag maker opened hundreds of stores and enjoyed having the market of accessible luxury pretty much to itself.
That helped it go from $38 million in sales in 1979 to $5 billion last year, enough to land a place on the Fortune 500 for the first time, squeezing in at No. 489.
But enter aggressive rival Michael Kors KORS -1.54% , and to a lesser extent Kate Spade KATE -1.54% , in the last three years, and Coach’s sales in North America have plummeted, imperiling its place in the Fortune 500.
Last quarter, Coach reported a 21% drop in North American comparable sales, the fourth straight quarter of worsening declines in a market that generates almost three-quarters of its revenues. Analysts have long said Coach built out too big a fleet, making it hard to make sure each store was attractive, with the ubiquity of Coach stores hurting its upscale aura. The company now agrees.
“This worked when we were unchallenged,” Fran Della Badia, the head of Coach’s North American retail business, told Wall Street analysts in New York of its store expansion. “This isn’t working anymore.”
So to address that, Coach will close 70 of its 350 or so North American full service-stores in the first half of the fiscal year starting in two weeks. It will shift its focus to better stores and flagships in its 12 best markets, which collectively generate half of its North American sales. Coach is also going to scale back its factory outlet business, with five fewer stores.
The company expects its North American comparable sales to be down by a high teen percentage in the new fiscal year as it shifts gear, and to finally return to growth two years after that.
Coach, blamed by analysts for relying too heavily on promotions and thereby destroying its upscale image, also said it was going to scale back sales events in its full service stores, holding only two semi-annual events.
 
#5
If department stores can still include Coach in their Friends and Family sales, then a lot of people will just focus on shopping in those locations versus at Coach directly. I don't know many people that would wait around for a semi annual sale that *might* have the bag they want, when they can just go buy what they want on sale at one of many department stores.

Plus, a lot of people were excluded from PCEs anyway, so already had to take that approach.

Will they list somewhere the stores that are closing? I am curious....
 
#8
crazyforcoach09 said:
LOL and only closing FIVE outlets
Click to expand...
It makes sense to me. I live in California - very high rents - and those fp stores are so empty.

The way we buy things is different now - much more on line. I don't care who i buy the bag from as long as they get me the best price and most usually the best price is not in the full price store.

I do like the bags though. I will continue to buy.
 
#10
weibandy said:
It makes sense to me. I live in California - very high rents - and those fp stores are so empty.

The way we buy things is different now - much more on line. I don't care who i buy the bag from as long as they get me the best price and most usually the best price is not in the full price store.

I do like the bags though. I will continue to buy.
Click to expand...


all the FP stores I go in are EMPTY
 
#13
My local FP is closing, not surprised, I NEVER see anyone buying from there, even during the holidays. How can they compete with Dillards and Macys in the same mall? Dillards is known for their wicked sales. Coach can't compete unless they restrict how the Dept stores sells their merchandise.

Ours closes next week or the end of the month, no going out of business sale, though.
 
#14
This really isn't surprising, unfortunately. With PCEs, Facebook coupons, outlets, quick turnover of floor sets, department store sales, FOS, etc., unless a bag is an absolute must-have, there's just no percentage in paying full price for it. Coach needs to work out their identity issues, and soon!
 
#15
pslpursemom said:
My local FP is closing, not surprised, I NEVER see anyone buying from there, even during the holidays. How can they compete with Dillards and Macys in the same mall? Dillards is known for their wicked sales. Coach can't compete unless they restrict how the Dept stores sells their merchandise.

Ours closes next week or the end of the month, no going out of business sale, though.
Click to expand...

How do you know your store is on the list?

I have two in my town. I bet the one in the mall closes....not sure about the other one.
 
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