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Coach Inc., the handbag and accessories titan, is entering what it calls a transformational period in which it hopes to emerge as a full-fledged global lifestyle brand in the eyes of consumers.
Starting with an “amplified” rollout of footwear this spring — which will be followed by an increase in secondary categories such as men’s and women’s apparel, outerwear, watches and jewelry, as well as a new store look — Coach is in the process of redefining the brand. Tory Burch, both of which have nibbled away at Coach’s still-dominant share of the North American handbag market.
While the changes have been at work for almost a year, the brand reinvigoration comes at an opportune time. The “disappointing” results were pulled down by the company’s women’s handbag business in North America, according to Frankfort, who said comparable-store sales in North America fell 2 percent. Although the company acknowledged new competitors, Coach said macroeconomic factors, such as the impact of Hurricane Sandy and uncertainty surrounding the fiscal cliff, played a role in the weaker results.
Coach’s new direction is rooted in the desire to speak to the consumer from an “emotional way” rather than a “functional one,” according to Reed Krakoff, the brand’s president and executive creative director, who informs the design of the collection and store layout.
Consumers have seen an early iteration of the lifestyle push in the brand’s Legacy collection, a vibrant, dual-gender footwear, accessories and apparel line that hit stores last summer. According to the ceo, the market for luxury handbag and small leather goods priced over $300 is $3 billion, and that’s a market that the brand hasn’t fully tapped — Legacy withstanding.
Instrumental to Coach’s transformation is a curated capsule collection that will flow into stores on a quarterly basis and inform the fashion direction of the brand’s collection.

That will change starting in August, when displays will incorporate all categories, from apparel and footwear to eyewear and handbags. In terms of product, the “evolution” of Coach will begin with shoes, offered Krakoff, who explained that, through the brand’s licensing deal with Jimlar Corp., the company will “elevate” its offering. Led by former Camuto Group president Javan Bunch, who was hired as senior vice president of licensed businesses, footwear will have a greater presence in roughly 100 stores starting this spring. Krakoff, whose designs for his namesake label were worn by First Lady Michelle Obama at Sunday’s swearing-in ceremony, is really tasked with changing Coach existentially.
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As the need for effective beauty products free of unpronounceable ingredients increases, so will the demand for stores that caters to customers who need clean products.
Most of us have probably seen the commercials for Cindy Crawford’s beauty line without bothering to give it a second thought. Coach reported weaker-than-expected second-quarter earnings today and turned in its first quarterly negative same-store sales figure since the recession hit.
The handbag maker also cited its decision to refrain from promotions during holiday even as competitors increased markdowns. That higher-priced collection not only sparked the transformation of the brand’s advertising and in-store merchandising, but also provided consumers with a new lens through which to view the New York-based heritage leather bag maker.

The price range is a threshold the brand has been trying to conquer since the economic downturn in 2008, when the bulk of its offering was priced over $300. In North America, bags priced about $400 made up 20 percent of its holiday handbag business versus 16 percent a year ago. The collection of looks will encompass handbags that range from $500 to $800, and comparably priced footwear and apparel. While with the launch of Legacy, Coach was able to infuse the store windows with a whimsical nod to its heritage with vintage-inspired bags, which are sleeker and more colorful than their predecessors, windows remained accessories-centric.
Hill, who most recently served as Bonobos’ vice president of creative design and joined the firm last week, is perhaps best known for her 16-year stint at Paul Smith, where she worked as the brand’s creative design director of women’s wear. The addition of Hill represents a shift in strategy at the company, which confirmed it is focusing more on clothing even as it will remain accessories-centric.
But even though it makes up about 12 percent of the overall business, the men’s division is, in some ways, closer to embodying Krakoff’s lofty brand objectives. The flagging comps were offset by strength in Coach’s international business, led by double-digit same-store sales growth in China.

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