Coach’s revamped retail strategy
Despite the 1% reported sales decline in fiscal 1Q16, Coach (COH) saw several positive points in the quarter (COH). The company reported a positive global response to its revamped retail strategy, which includes wholesale, retail, and outlet stores remodeled on the modern luxury concept. According to the company, revamped retail stores in North America were experiencing positive comps[1. Based on comments by Victor Luis, CEO of Coach]. The company also reported a strong performance in its international operations, especially in Europe, Japan, and China. Same-store sales in Europe grew at a double-digit pace.
In 2014, Coach appointed a new head of design, Stuart Vevers, formerly creative director for British handbags maker Mulberry. He also previously worked for Calvin Klein (PVH) and Loewe, a Spanish fashion house that is part of LVMH Group’s (LVMUY) brand stable.
Coach hosted its first runway show at the New York Fashion Week in September 2015 under Stuart Vevers. Coach’s show made it to Vogue’s Top Ten ranking at the New York Fashion Week. Coach also ended up with 800 million impressions, about five times more than during the Fall 2015 New York Fashion Week presentation, held in February. Coach was also the fourth most Instagrammed brand of the show[1. Based on comments by Victor Luis, CEO of Coach speaking at the 1Q16 earnings conference call].
Having critically acclaimed and popular collections, particularly in social media, bodes well for Coach’s future as a luxury lifestyle brand. Besides, the global transformation of its stores appears to be yielding positive results, as we’ll discuss in the next article in this series.
However, a sequential improvement in same-store sales, while a positive first step for Coach, would not give the company the boost it needs in the short term. Also, while the brand’s international operations are performing well, they’re a relatively small piece of the revenue pie.