Coach on Tuesday announced that it will shutter about 25 percent of its North American department store locations. Most of the locations tend to be low volume, according to the company, and the closings will be spread out in terms of geography. Coach will keep open its best-performing sites and avoid the stores that put its bags on sale or clearance at huge discounts.
Total Retail's Take: This is a shift in strategy for the handbag and accessory brand, which grew its business from sales generated in discount-heavy department stores. Coach is seeking to raise its perception among consumers as a luxury brand, joining the likes of Louis Vuitton, Prada, Chanel, Hermes and others. Selling its products at discount prices in Macy's, Belk, Nordstrom and other department stores doesn't fit with that objective. Can Coach grow by sacrificing potential sales volume in exchange for attracting more loyal, higher lifetime value customers? We shall see, but the company is off to an encouraging start. In its fourth-quarter earnings call yesterday, Coach reported a 15 percent increase in sales and, more importantly, a profit that exceeded analysts.