We may just have started summer, but it seems like store closing season in the real estate game, with some major names retrenching.
Facing an onslaught of better and designer accessories designers including the surging Michael Kors, Coach has announced at its Analyst and Investor Day that it will close 70 of it 350 stores in North America by early next year, and possibly more going forward.
“The landscape has shifted dramatically and is populated with new players and new dynamics,” said Victor Luis, CEO. “We have now reached a unique moment in our brand. We have to transform the Coach brand, and we have to be bold.”
Luis noted that it remains the top domestic accessories brand and number 2 worldwide, with a growing presence on three continents. In North America, though Coach is planning to concentrate on its best 12 MSAs (Boston, New York, Toronto, Chicago, Dallas, Miami, Houston, Las Vegas, San Francisco, Los Angeles, Pacific Northwest and Hawaii, which generate half its sales).
“They serve as beacons for the brand message, given their high traffic levels and tourist penetration,” said Francine Della Badia, President of North America Retail. “As we move forward, there may be more [store closures] beyond FY15.”
It also will cut back on its factory outlet store growth, remaining net growth neutral. New locations will be prioritized first by co-tenancy. Thirteen standalone men's outlets will be consolidated into existing women's stores.
Coach has long promoted itself as an “accessible luxury” brand. Now, Kors is the hot name in that sector, with Coach's same-store sales plunging 21 percent in its last quarter. And many who purchased a Coach as a first “good” bag have now graduated up to Prada, Louis Vuitton or other luxury brands. The new approach will be “modern luxury” as defined by new chief designer Stuart Vevers.
Meanwhile, fashion website racked.com reported that Juicy Couture will close all of its stores (more than 100 boutiques and outlets) in the United States by the end of June. The merchandise will still be available overseas.
One retailer is a classic – the other the classic example of a fad. Both will leave some vacancies to fill.
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