How Long Can the Coach Officially Launch Its Women's Clothing Line?

Beginning in the spring of 2013, Coach will launch more shoes in 100 U.S. full-price stores and 50 flagship stores worldwide. Then, Coach will officially launch its women's clothing line.

Coach hopes to use this strategy to solve the problem of hitting the top of the handbag market. Coach CEO Lew Frankfort gave a less optimistic performance data at the second quarter 2013 financial results announcement on January 23rd: Coach's total revenue in the second quarter was $1.5 billion, of which revenue growth in China was as high as 40%. However, in North America, which occupies 73% of Coach's overall revenue, same-store sales have fallen by 2% year-on-year. This is the third time Coach has seen a negative growth in same-store sales for 12 years. The first occurred in 2002 after the September 11th incident, and the second was in 2009 when the global financial crisis was severe.

In order to save the tide, Coach has also tried many ways to tap new customers, such as launching the "poppy series" for girls aged 16 to 25. These handbags, with an average selling price of only 260 US dollars, are bright and light in texture. Nameplates bearing Coach logos are no longer stereotyped prints, but playful graffiti fonts.

Coach's average price is $ 300, but Lew Frankfort has found that more than $ 400 handbags have begun to have more and more customers. In the summer of 2012, the "Legacy Series" handbags, priced from $398 to $1400, were placed on the display racks of each Coach store. Coach's recent holiday sales statistics show that handbags with more than $400 accounted for 20% of Coach's holiday sales, compared with 16% a year ago.

However, these are merely adjustments made based on the existing product structure. The sale of handbags and accessories is not enough to sustain it in the fierce competition environment.

Not that handbags can no longer bring profits. One of the secrets of the fashion industry is that the focus of Fashion Week will always be apparel, but 70% of the profits are created by the handbags and shoes of these brands – but Coach’s brand traits are today Not attractive.

Coach was born in Manhattan, New York, United States in 1941. It was initially tepid. Until 1996, Lew Frankfort invited young designer Reed Krakoff to join the company as creative director and reposition Coach as low as US$125. The "Affordable Luxury" was very popular.

The new handbags are similar to European luxury brands in terms of material and style, but they are much cheaper. The extremely competitive price/performance ratio helped Coach to quickly open up the mass consumer market: these handbags filled the growing desire of middle-class consumers and subtly maintained their identities. Coach listed on the NYSE in 2000 and has maintained double-digit sales growth every quarter for the next six years.

In order to reduce production costs, Coach has never denied that most of the production of handbags outsourced the Chinese foundries. Coach has set a brand new model for business models for many brands, producing low prices in China, and at the same time making high profits from handbags, which are high-frequency products.

Currently Coach still accounts for 35% of North American women's handbag market, but Lew Frankfort has become increasingly aware that "this market has changed." The negative growth in Coach's North American same-store sales in the second quarter of 2012 shows that Coach's market is being eroded by competitors such as Tory Burch, Kate Spade and Michael Kors.

The growth momentum of these competitors is very rapid. Kate Spade and Michael Kors released their financial statements in the second and fourth quarters in November 2012 and January 2013, respectively. The same-store sales growth of the two brands was 27% and 45.2%, respectively.

Founded in New York in 1993, Kate Spade has a stronger style than Coach. The splendid candy-colored Kate Spade sells sweet but still dignified. The brand also sells mainly handbags, but then gradually added perfume, shoes, and women's clothing to the product line, attracting many young office workers.

Michael Kors belongs to Calvin Klein of the new era. The style is simple and concise. It launched women's clothing from the very beginning and has a sub-brand "MICHAEL Michael Kors" selling shoes and handbags. Michael Kors, the founder of Creline's creative director, is good at combining fashion and casualness. Moreover, Michael Kors himself has a certain appeal in the fashion industry.