This has been an ongoing problem with Coach for as long as I've been on the forum. Every year it seems we hear things are going to change and FP bags aren't going to make it to the outlet, and every year we see FP bags at the outlet. I think they are really trying to keep 1941 bags from ending up at the outlet.
What is going on with Coach?
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Here is a new report from TheStreet that highlights some of the positive results earned through the recent strategy realignment.
Coach Names New CFO as Turnaround Continues
Jan 4, 2017
Coach (COH) has named Kevin Wills as its new chief financial officer after former CFO Jane Nielsen left for Ralph Lauren(RL) in August.
Shares were trading up 2.84% to $36.52 early Wednesday morning.
Wills will take over the role from interim CFO Andrea Resnick no later than March, the luxury retailer said in a statement this morning.
Most recently, Wills served as CFO for global business advisory firm AlixPartners LLP, where he oversaw all financial management, capital restructuring and mergers and acquisitions. He joined AlixPartners after nearly 16 years at Saks Inc.
The transition comes as the 76-year-old brand attempts to reinvent itself.
Coach has been shifting its focus away from logo bags to appeal to more fashion-engaged consumers, CEO Victor Luis, who took charge of the company in 2014, told TheStreet last year.
After reporting a 38% year-over-year decline in profit for fiscal 2015 and 13% drop in revenue, the company in fiscal 2016 saw 3% profit growth and a 7% increase in revenue.
FactSet analysts expect this upward trend to continue in fiscal 2017, with projections of 8% profit growth and 2% revenue growth.
An apparently strong holiday season could help the retailer meet these expectations.
BMO Capital Markets named Coach one of its holiday winners in a note released late yesterday.
"Interest in Coach's Disney (DIS) and Rexy designs have driven the brand back into prominence, and as a result, we have seen a reduction in markdowns at wholesale," BMO analysts wrote.
"We remain cautious on COH because the outlet channel remains challenged, but we are encouraged by the company's initiatives to drive differentiation between the two channels, which we believe will ultimately elevate the brand's perception," BMO continued.
Oppenheimer has been similarly bullish on the name, noting last month that Coach's current-quarter promotions have been less deep than a year ago as limited edition collections have helped drive traffic.
The firm added that Coach is gaining market share for the first time in three years.
Coach Names New CFO as Turnaround Continues
Jan 4, 2017
Coach (COH) has named Kevin Wills as its new chief financial officer after former CFO Jane Nielsen left for Ralph Lauren(RL) in August.
Shares were trading up 2.84% to $36.52 early Wednesday morning.
Wills will take over the role from interim CFO Andrea Resnick no later than March, the luxury retailer said in a statement this morning.
Most recently, Wills served as CFO for global business advisory firm AlixPartners LLP, where he oversaw all financial management, capital restructuring and mergers and acquisitions. He joined AlixPartners after nearly 16 years at Saks Inc.
The transition comes as the 76-year-old brand attempts to reinvent itself.
Coach has been shifting its focus away from logo bags to appeal to more fashion-engaged consumers, CEO Victor Luis, who took charge of the company in 2014, told TheStreet last year.
After reporting a 38% year-over-year decline in profit for fiscal 2015 and 13% drop in revenue, the company in fiscal 2016 saw 3% profit growth and a 7% increase in revenue.
FactSet analysts expect this upward trend to continue in fiscal 2017, with projections of 8% profit growth and 2% revenue growth.
An apparently strong holiday season could help the retailer meet these expectations.
BMO Capital Markets named Coach one of its holiday winners in a note released late yesterday.
"Interest in Coach's Disney (DIS) and Rexy designs have driven the brand back into prominence, and as a result, we have seen a reduction in markdowns at wholesale," BMO analysts wrote.
"We remain cautious on COH because the outlet channel remains challenged, but we are encouraged by the company's initiatives to drive differentiation between the two channels, which we believe will ultimately elevate the brand's perception," BMO continued.
Oppenheimer has been similarly bullish on the name, noting last month that Coach's current-quarter promotions have been less deep than a year ago as limited edition collections have helped drive traffic.
The firm added that Coach is gaining market share for the first time in three years.
For a company that is trying to 'elevate' itself, they sure do know how to discount the crap out of their products. I returned 4 different bags this holiday season after seeing them for 30% to 40% less than what I had just paid literally weeks before. And since when does Coach run such long sales on their website for as much as 50% off, for MONTHS at a time? Did they do that last year??
Don't get me wrong, I love the lower prices and sales. But I don't see this as a way of elevating their brand between this and the outlets. To me, Coach is just a mid-level brand with a few higher priced bags that eventually end up on sale. Still love them though and I will continue to buy, especially with the great discounts. Just not sure how many would pay full price at this point.[/QUOTE]
Even prestigious lines have sales to end a season or run. Lucky be the girl or guy that gets the bargain. Selling a $9,000 Prada bag for 66% off has to to hurt those who paid full price. Point being all companies have to clear inventory. Except maybe LV, but I'm guessing this is because their styles rarely change, but rather are tweaked and remain season after season. 20 years later I can still buy my Speedy 30. I may never again
see my Pink Rocket Dinky 32, so I'm in.
I love it when FP bags are available in the outlet! Even if I have to wait several months before I can carry it. I used to worry that I might miss the bag I dearly desired if I waited for it to show up in the outlet and I would break down and buy it from the boutique, hopefully with with PCE. But now I have come to recognize that "there will always be a new bag coming out" and if I miss one it isn't usually a big deal - I have lots of bags. I try not to pay too much attention to the new releases. I wait to see which FP deletes show up in the outlet that catch my fancy. If they stop selling overstock in the outlet I will probably stop buying new bags - except on very rare occasions and only on sale!
I have also been burned by MFF versions of boutique bags that come out after the originals, like MFF Zoe and Madison bags. Now I try to be reserved and only buy bags that really appeal to me as something special. I don't usually buy multiples of the same bag and I try not to pick up a bag just because it is a "good deal".
But I still wish that the MFF bags were differentiated from the boutique bags, no matter where you buy them or how much you paid, because the FP bags are usually much nicer products IMO. I remember someone suggested calling MFF bags "Foach" because they are Factory Coach products!
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To clarify: department stores have quasi-exclusive control over pricing (because they buy the inventory), which explains why sales are deeper at department stores than at namesake boutiques (which is to say you won't find anything at 66% off at Prada). This is the main reason that prompted the recent efforts by Coach and Michael Kors to reduce their inventory at department stores and refuse certain discounts ('family and friends sale'-type etc) to be applied to their products. The situation is a bit different in department stores that have mini boutiques (Vuitton, Chanel, etc). The items in these "corners" are still owned by the brands who simply 'rent' a small retail space within the department store. Prada products belong to both configurations.
Contrary to your statement, Louis Vuitton introduces a lot of different items each season but the unsold inventory is removed from stores and destroyed (then claimed as a tax deduction). Some items are, of course, offered at a discounted price to LVMH employees, although the number of items is limited due to risk of resale (but that's a different topic!).
Thanks for the education --- after reading your post, I Googled LV destroying unsold inventory and the reason behind it.
I had no idea about this -- so interesting!
Companies also routinely buy back their inventory to protect their brand image from sales which is another method of controlling sales.
I've also been mystified as to how Coach can have these concurrent sales going in so many retail establishments. Just like someone else mentioned, over Veteran's Day I purchased a Willow Nomad from Macy's at 30% off, feeling like I couldn't believe my luck since I'd just seen it in the boutique. I let it sit in my closet, just in case a better deal came along. A few brand new bags popped up on Ebay at a lower price so I decided to return it and wait it out. But where did the Ebayers get them from, and what did they pay in order to still make a profit? After constantly checking Coach's website and Macy's, there it was on a one day flash sale (about 50%) midnight on the 25th. And I don't remember Coach having a 50% sale all the way into January. How can they have it on sale at department stores but still full price at the boutique?
I am always amazed at how cheap some new bags are on ebay. I recently bought a bag on ebay that was on Coach.com for full price. There were many sellers with the same bag priced close to what I paid. I paid $100 shipped for a bag that retailed at $275. A few weeks later, Coach put it on sale for 40% off. It sold out at that price. I have no idea how the sellers on ebay could afford to sell it for the price I paid. Once you add in the fees sellers have to pay and shipping costs, my ebay seller would have to had got it for less than $75 in order to break even. Where do these sellers find them before they are discounted anywhere, and who is selling them for such a bargain price?
Coach can't tell department stores what they can put on sale. So if Macy's wants to put Coach on sale before Coach does, they can. That is one of the reasons Coach is trying to reduce the number of bags that are available in department stores.
I bet a lot of those new, not fake eBay bags literally fell off a truck, probably a good supply of those at the moment... http://www.nj.com/essex/index.ssf/2016/12/truck_hauling_500k_in_purses_reported_stolen_from.html
I ordered two bag charms and two pairs of sneakers on Dec 31st. Got them yesterday. Shipping was fast and free! All items are good quality. But complimentary gift boxes were only two small ones for the charms, sneakers arrived just in regular boxes with brown ribbon. And one pair of sneakers is a gift for my niece. Sigh....
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Ahh, I didn't realize department stores could set their prices. In that case, why would anyone pay full price for the merchandise that isn't 1941? I really didn't want to purchase from Macy's because I wanted the boutique experience, but a deep discount trumps atmosphere.
Same bag, cheaper price and a better return policy (if needed). If the boutique experience includes getting a bottle of water and having someone bring you your bag from the back, I'd buy from Macy's.
There is a double issue. Let me take MK and Coach as examples, but this applies to a lot of "aspirational" brands.
1) Mid-range department stores like Dillard's and Macy's have seen their profits collapse over the past few years due to a significant reduction in foot traffic at brick-and-mortar malls. Let's face it, shopping habits are drastically changing. This phenomenon prompted department stores to put in place more aggressive sales strategies to attract shoppers. As a result, some products by MK or Coach are discounted further and/or more often than at the Coach or MK boutique. Needless to say that this is VERY BAD for the image of these brands because many shoppers now EXPECT to buy the item discounted (the famous "let's wait for the next sale" attitude). In 2016, we have seen both brands reduce inventory at department stores (even completely eliminate their presence) in order to regain control over pricing.
2) Over the past few years, Coach and MK have also been more aggressive on their own when it comes to discounts because their brands have suffered shoppers' fatigue (most notably the coach logo bags and MK bling bling hardware were seen by many as tacky and cheap). So, how do you bring back customers willing and happy to pay full price for an item? Coach has been working hard on this problem and they are finally starting to see results. But there is still a long road ahead in my opinion.
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