Coach to scale back US store openings
By Jonathan Birchall
Published: January 21 2009 18:02 | Last updated: January 21 2009 18:02
Coach, the US leather goods and accessories brand, is to scale back planned new-store openings in the US and sell more lower-price handbags as it fights the slump in discretionary spending.
Lew Frankfort, chief executive, described the recent Christmas period as the worst he had seen in 30 years but stressed that Coach had avoided discounting prices in its full-price stores to protect its brand.
The company said second-quarter sales fell 2 per cent to $960m, while earnings fell 14 per cent to $217m, or 67 cents per diluted share.
We will continue to protect our brand, he said, although the strategy meant that Coachs more than 300 full-price stores had seen declining traffic at a time when virtually the entire mall was on sale.
In addition to a previously announced 13 per cent fall in comparable store sales in North America, the company reported a 19 per cent drop in indirect sales through US department stores.
Mr Frankfort said discounting by department stores had reached unprecedented levels, with Coach opting to exclude its products from the 50- to 75-per-cent price cuts seen in luxury stores such as Saks and Neiman Marcus.
However, Coach has used its network of more than 100 factory outlet stores, where it sells end-of-line and lower-cost bags, to support sales.
The retailer said it planned to respond to slower discretionary spending from this summer by rebalancing its mix of bags and other items to include more products in the $200 to $300 range, resulting in an estimated 10- to 15-per-cent drop in the average price of its products.
We realise that consumer spending after this period will not return to the same levels, Mr Frankfort said.
Coach will cut its planned expansion in North America from about 40 new stores a year to about 20. However, it said its plans for new stores remained unchanged in China, where it saw double-digit comparable sales growth during the quarter.
●So guess they won't be opening any store in the UK then
By Jonathan Birchall
Published: January 21 2009 18:02 | Last updated: January 21 2009 18:02
Coach, the US leather goods and accessories brand, is to scale back planned new-store openings in the US and sell more lower-price handbags as it fights the slump in discretionary spending.
Lew Frankfort, chief executive, described the recent Christmas period as the worst he had seen in 30 years but stressed that Coach had avoided discounting prices in its full-price stores to protect its brand.
The company said second-quarter sales fell 2 per cent to $960m, while earnings fell 14 per cent to $217m, or 67 cents per diluted share.
We will continue to protect our brand, he said, although the strategy meant that Coachs more than 300 full-price stores had seen declining traffic at a time when virtually the entire mall was on sale.
In addition to a previously announced 13 per cent fall in comparable store sales in North America, the company reported a 19 per cent drop in indirect sales through US department stores.
Mr Frankfort said discounting by department stores had reached unprecedented levels, with Coach opting to exclude its products from the 50- to 75-per-cent price cuts seen in luxury stores such as Saks and Neiman Marcus.
However, Coach has used its network of more than 100 factory outlet stores, where it sells end-of-line and lower-cost bags, to support sales.
The retailer said it planned to respond to slower discretionary spending from this summer by rebalancing its mix of bags and other items to include more products in the $200 to $300 range, resulting in an estimated 10- to 15-per-cent drop in the average price of its products.
We realise that consumer spending after this period will not return to the same levels, Mr Frankfort said.
Coach will cut its planned expansion in North America from about 40 new stores a year to about 20. However, it said its plans for new stores remained unchanged in China, where it saw double-digit comparable sales growth during the quarter.
●So guess they won't be opening any store in the UK then
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