Three Years In: Coach’s Restructuring Plans Provide a Template for Competitors
Three years into its turnaround plan, Coach is proving that — with the right ingredients — a struggling heritage brand can gets its groove back.
Coach was helped by getting an earlier start than competitor brands including Ralph Lauren and Michael Kors, which have launched restructuring plans in the last year. Coach kicked things off in 2014 with a plan drawn up by the company’s then new CEO, Victor Luis, to reverse sales declines and transform the brand’s reputation from one of affordable luxury to that of a more exclusive tier.
The brand reported a significant 21 percent decline in North American comparable sales during the first quarter of 2014, after four straight quarters of similar sales declines. While that’s concerning by any standard, it was intensified by that market’s responsibility for three-quarters of the company’s overall sales.
The omnipresence of the product in department stores and outlets had diluted the brand from one that was more mass than iconic, said one former Coach employee, who worked on the turnaround. Once celebrated for its classic leather handbags, the brand had devolved into being the cheapest pseudo-luxury option for the early-aughts logo-maniac. Designer Stuart Vevers was hired to remedy that in 2014, looking to the brand’s heritage pieces and New York roots, in lieu of the overly-branded product it had become known for.
Closing 20 percent of its full-service stores and five of its outlets, as well as rethinking its wholesale accounts (their location, in-store layout, etc.), was also set in motion to help the transformation. Other plans included reducing the frequency of online sales events for its outlets, remodeling stores to attract a more upscale clientele and relaunching the brand’s e-commerce site.
Coach has also made strides toward becoming the first American luxury conglomerate, in the vein of an LVMH or a Kering. After acquiring Stuart Weitzman for $574 billion in 2015, it bought Kate Spade in May for $2.4 billion. Both moves are intended to bolster the brand’s weakened equity and lend it fighting weight against its industry equal Michael Kors, which followed suit by buying Jimmy Choo for $1.2 billion in July.
With Instagram’s most popular celebrity, Selena Gomez, also brought on board as the face of the brand last year, here’s a look at how all of these changes are faring for Coach so far.
See the full story with coverage of PMX Agency’s 2017 Luxury Study here in Glossy