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“I’m not surprised,” said Kirk Palmer, owner of Kirk Palmer & Associates, an executive search firm, when discussing the Krakoff news Tuesday. “Clearly Reed was tied to the hip with Lew. They built an iconic brand. It’s going to evolve, and it’s ready to go to the next level. Victor will be different than Lew, and they’ll be a different creative direction from Reed.” He said whoever is doing the search “can call anyone.” It’s really “Who do I want?”
Looking back on his years working with Krakoff, Frankfort said, “It’s been an amazing partnership, both professionally and personally. Reed and I have been building a strong creative team. They are benefitting from Reed’s tutelage.”
Over the last quarter Coach has hired executives to progress the brand’s in-store merchandising, design, licensing, and product development. All of this is part of its quest to elevate its status to a “global lifestyle brand rooted in accessories,” as Frankfort likes to call it. Instrumental to this transformation is a curated capsule collection that will flow into stores on a quarterly basis and inform the fashion direction of the brand’s collection. The collection of looks will encompass handbags that range from $500 to $800, and comparably priced footwear and apparel. This will naturally elevate Coach’s price range. Currently, Coach’s sweet spot for bags in North America is $300.
With the new team in place, Frankfort underscored that Krakoff’s departure — and his own, to some extent — will make for a “seamless transition.”
Recently, Coach brought on Sandra Hill as executive vice president of women’s design, Jeffrey Uhl as senior vice president of men’s design, Javan Bunch as senior vice president of licensing and Maria Turgeon, who was promoted to the new role of senior vice president of women’s factory design.
Zach Augustine, executive vice president of global environments, and Erin Thompson, vice president and artistic director of global environments, joined team Coach last quarter.
The intangible magic of Frankfort and Krakoff has left an indelible mark on the brand.
“We met in this room,” said Frankfort, sitting comfortably in a brown leather chair positioned next Krakoff in the conference room.
Sixteen years ago, Frankfort had a meeting with Krakoff, who was about to get on a plane to fly to Milan to go work for Italian house Trussardi.
“I persuaded him to help me transform Coach from a house of American leather goods into a modern accessories brand,” the ceo said with a smirk. “We’ve exceeded our highest expectations. Each milestone led to looking for a new one. The brand has flourished, the business as well. It’s been a remarkable journey, a lot of hard work, a lot of fun…and incredibly successful.”
Frankfort joined Coach 33 years ago as vice president of new business development when the company was a small, family-run leather goods maker. In 1985, Sara Lee Corp. bought Coach for $30 million. That year Coach’s sales were $19 million and Frankfort took over as president. Ten years later, in 1995, Frankfort was named chairman and ceo. Sales topped $500 million a year later, and in 2000, Coach went public through an initial public offering, raising $118 million at $16 a share.
In 1996, Frankfort hired Krakoff, who is largely credited with changing how the brand merchandised and developed its handbag collections. Krakoff pumped up Coach’s fashion quotient for bags and how fast the brand brought new designs to market. Krakoff began bringing new collections to market at the same frequency that new designs in rtw appeared in stores, which was a novel concept at the time. Just five years after Krakoff started, Coach’s sales reached $616.1 million.
Rapid expansion both domestically and internationally followed suit, as did the establishment of a men’s business; Poppy, a contemporary youthful accessories brand, and Krakoff’s luxe sportswear line. Although Coach was founded in 1941, Frankfort, with the help of Krakoff, is recognized for building the brand to what it is today, a $4.76 billion company.
Back at Coach’s headquarters, Krakoff seemed less nostalgic than amazed at what he has been able to accomplish with Frankfort.
“It’s difficult to put into words,” Krakoff said of his relationship with the ceo. “It’s really surpassed expectations. The key to our success is that we had absolute trust and could see the other side of the issue.”
With Coach in the midst of growing its business in Asia — in China, the firm is on track to generate at least $400 million in sales this year — as well as its men’s business, which is on course to earn sales of more than $600 million globally in fiscal 2013, up 50 percent from last year, Krakoff leaves the brand at a critical time.
Business in North America has been moderating somewhat, as consumers in the U.S. continue to shop bargains and look to high-flying rival brands such as Tory Burch and Michael Kors for trendy bags.
But according to Coach, Krakoff’s designs will be part of the brand’s collections through June 2014. What’s more, his influence on how Coach evolves its look both in-store and via product will be felt during its evolution to becoming a lifestyle brand. Consumers will begin to notice changes starting at holiday.
For Krakoff, the challenges that Coach has faced in its evolution are something he will bring to RK, he said, adding that lessons he has learned from Frankfort will also serve him dearly as he moves on.
“It’s a time of new beginnings for us both,” said Frankfort, who, when asked if he foresees working with or playing a part in Krakoff’s new business, added, “Life is very long. Reed and I will be involved with each other, continuing.” With a knowing grin, the ceo offered, “What I need to do next with Reed is to play chess with him."