Several months ago, I was in a Coach store and the sales lady told my friend and I that Coach would be slowly phasing out or lessening the monogram design on their handbags.
I immediately thought, “This is such a travesty! Coach is known for their monogrammed bags – how could they do this?”
I went onto their website recently and realized she wasn’t kidding. There were fewer monogrammed handbags and more high-end looking handbags in the product selection.
Anyway, the other day I saw that North American sales for Coach had dropped in Q3, and half-jokingly I said to my colleagues it’s because they are doing away with their monogrammed handbags! I’m sure that isn’t the case, and that reason for the decline has very little to do with the disappearing monograms.
Coach’s North American sales fell 24% to $493 million the quarter, down from $648 million last year, on a 23% same-store sales decrease.
Throughout the third quarter, said Coach CEO Victor Luis, the company closed 56 North American retail locations and is looking to close approximately 70 for the full year. Coach closed 13 outlet stores in the quarter, including metro-only locations which folded into existing stores, leveraging their associate teams and cross-shopping opportunities.
Internationally, Coach’s sales rose 4% in the quarter, but declined 3% on a reported basis due to a stronger dollar. China sales were up 10% in constant currency and 8% in dollars.
“We remain optimistic about the prospects for (the international market) over time as the long-term drivers we have consistently mentioned remain intact, including a rapidly growing middle class and an over-shift from pure status to value,” Luis said. “As well, the recent (Chinese) anti-corruption and anti-extravagance campaigns have favored the affordable luxury segment and the evolving retail landscape with the development of new luxury shopping malls.”
Luis said Coach has experienced an uptick in Chinese tourist spending in Japan and Europe, especially around Chinese New Year, aided by the compelling value the weaker yuan and Euro has given the Chinese shopper.
Coach continues to believe that Europe represents a significant long-term opportunity, he said, both from domestic shoppers and international tourists.
Disappearing monograms or no, it seems that Coach continues to be a highly sought-after status brand, both here in the U.S. and around the globe.