This week, the 73-year-old bag maker Coach announced its profits had beat estimates. It was a rare piece of good news in the midst of the company’s recent struggles to stay afloat.
As Bloomberg reports, Coach’s sales have fallen for four quarters in a row, and shares have fallen a total of 39% this year. Analysts say the declines are the result of opening outlet stores all over the U.S. and filling them with cheaper, CC logo-plastered bags--a move that diminished the brand’s luxury cachet and pricing power. Essentially, now that the brand has become more accessible to the masses, wealthier customers aren’t as interested in Coach’s higher-end, more expensive bags, which sell for upward of $1,200 apiece. These once-loyal consumers are defecting to competitor luxury handbag brands, like Tory Burch and Michael Kors, which has seen consecutive quarters of double-digit sales growth, according to Bloomberg.
Coach may seem like a casualty of fashion's classic "out with the old, in with the new" pattern, but it's a monolith in the handbag industry, still commanding 23% of the $12 billion U.S. handbag market. To maintain its market share, Coach's resuscitation plan is centered around trying to gain back prestige as a fashion-focused "modern luxury" company as opposed to an "accessible luxury" company, as Bloomberg reports. It's in the midst of a dramatic corporate transformation, overseen by a recently hired creative director, Stuart Vevers, who has done stints at Mulberry and Loewe, and a new CEO, Victor Luis. The company is cutting 150 jobs, offering fewer discounts, and shuttering 70 stores--a fifth of those in North America--while opening or remodeling full-price stores in the 12 biggest markets, offering more expensive products in capsule collections.
As a second part of their revival strategy, which began in September 2013, Coach has been trying to evolve into a full-fledged lifestyle brand, offering not just handbags but shoes and outerwear. The brand has updated its packaging, store look, and logo. Formerly an image of a horse and carriage and a wordmark that read "Coach 1941," the logo now simply reads "Coach New York" in small metallic letters.