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.