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Friday, June 20, 2014

Coach closing 70 Stores in North America

Coach’s gravy train kept on rolling for decades, as the New York handbag maker opened hundreds of stores and enjoyed having the market of accessible luxury pretty much to itself, until other makers began to take over.

That helped it go from $38 million in sales in 1979 to $5 billion last year.

But enter aggressive rival Michael Kors, and to a lesser extent Kate Spade in the last three years, and Coach’s sales in North America have plummeted.

Coach reported a 21% drop in North American 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.

As a result, Coach will close 70 of its 350 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.


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