Coach Still on a Roll:As Profits Leap 60%, Big Expansion Ahead

Coach’s first-quarter sales jumped 33 percent, earnings rose 60 percent, its store count is set to add 100 units and it will remodel its flagship.

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Tucci said the company has 10 concepts and items in place for holiday that he expects to make up roughly 50 percent of the Coach’s overall business in the second quarter. Holiday floor sets will be set up in stores on Nov. 22, and Tucci said there will be a front table change in all stores in mid-December to freshen stores and drive traffic.

Tucci also revealed Coach’s new lifestyle evening collection, called Madison, which is set to launch next Monday. The line will include handbags, accessories, hats, scarves, gloves, shoes and outerwear in rich satins and will feature rhinestone buckles.

Meanwhile, both domestic and international expansion remain a key focus for Coach, with five retail and five factory stores opened during the first quarter. In Japan, four stores were opened and six were expanded. At the end of the quarter, Coach’s total store count was 179 retail stores and 81 factory stores in the U.S., and 103 stores in Japan.

Coach plans to open at least six more U.S. retail stores before the holidays. In Japan, four retail stores will open, including what will be its first flagships in Osaka and Sendai.

Looking to fiscal 2005, Coach expects to add a total of 20 to 25 retail stores in the U.S. Some of the units will be in markets that the company feels can generate fuller price points. At least nine of the company’s most productive stores, such as Copley Square in Boston and South Coast Plaza in Southern California, also will be expanded in 2005 to add a total of 14,000 square feet, or more than 3 percent, to Coach’s total full-priced selling space, Frankfort said. Total capital expenditure in fiscal 2005 is seen at more than $85 million, Coach chief financial officer Michael Devine said on the call.

Regarding the remodeling of the flagship in New York, Frankfort said the location will close in January and will reopen in the summer as an 8,750-square-foot store. “The new design will restore the space to its original landmark heritage while providing a modern, classic store environment to enhance the brand and showcase our pinnacle product,” said Frankfort. “We’re increasing the first floor on 57th Street and we are increasing the second floor on both Madison and 57th Street.”
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