Coach’s move into the budget handbag sector has seen the luxury label grow despite the financial crisis.
The brand’s profits fell slightly in the fiscal first-quarter, but revenue is up. This is an encouraging sign when so many luxury labels are suffering.
Consumers have embraced Coach’s budget bags priced between $200 and $300, particularly the Poppy line. Around half of Coach bags are priced under $300, compared to just 30% a year ago.
“For the foreseeable future, we do not expect the consumer to spend as much as she has done in discretionary areas,” CEO Lew Frankfort told investors. He added, “We have adapted our pricing and product strategies to be successful in what will become the ‘new normal.’ “
While customers are spending less, Mr. Frankfort says they’re doing it with confidence.
“We have seen a significant improvement in our customers’ outlook for the economy and intention to purchase over the next year.”
Coach is capitalizing on the results, with plans to introduce two new women’s accessory groups, Waverly and Gramercy. There’ll also be new Poppy items priced under the magic $100 mark. Boys won’t be forgotten either, with the brand planning to open its first men’s stand-alone store next to its Bleeker Street outlet in New York City.
[Image Source: Coach Poppy website]
