Coach Finds Success in Selling More Expensive Handbags

Coach Finds Success in Selling More Expensive Handbags

Photograph by Kiyoshi Ota Bloomberg via Getty Images

Coachappears to be doing the nearly impossible in retail: the brand is winning back its upscale reputation.

The leather goods maker on Wednesdayreported a 3% increase in comparable sales in North Americain the quarter ended Dec. 31, the third straight quarter of growth. It managed that feat despite a tough environment for many retailers, particularly department stores, by selling pricier handbags.

Coach only emerged a year ago from a major two-year slump that saw comparable sales in North America, its largest market, fall by 20-plus percent in several quarters, hurt by too big a focus on promotions, confusion in customers mind about what was sold at its nicer full-service stores compared to its outlets, and a reputation for always being on sale. The endless rebate signage at key distributors like department store chain(out of 1,000 in all) by summer, presenting its fashions at runway shows and remodeling most of its own stores. It also recently signed on celebrity andtastemaker Selena Gomezto be its brand ambassador. And the New York-based company has also opened lavish flagship stores on Manhattans Fifth Avenue and Londons Regent Street. In addition, Coach has more clearly delineated the assortment at its full-line stores compared to its outlets and given store workers far more training.

All of that has led to improved perceptions around the brand, said Coach CEO Victor Luis in an interview. Earlier, he told investors on an analyst call that fewer consumers viewed the brand as being discount driven now than a year ago, citing company data.

Still, Coachs total sales remain well below the pre-meltdown levels but profit is up: the company reported a 17.4% rise in quarterly profit with net income hitting $199.7 million. Net sales rose to $1.32 billion from $1.27 billion, in line with Wall Street expectations.

And all the while, rivals like Michael Korsand Kate Spadeare only now beginning to address the same problems that plagued Coach a few years ago.

Sign up now to receive FORTUNEs best content, special offers, and much more.

Subscribe today and save 79% off the cover price.

Sign up now to receive FORTUNEs best content, special offers, and much more.

© 2018 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of ourTerms of UseandPrivacy PolicyYour California Privacy Rights).

Fortune may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.

Quotes delayed at least 15 minutes. Market data provided byInteractive Data. ETF and Mutual Fund data provided byMorningstar, Inc. Dow Jones Terms & Conditions: