Coach to Cut Back on New Stores

Coach Inc. (New York) has said it will scale back on its planned new-store openings in the U.S. and begin selling more lower-price handbags as it fights the slump in discretionary spending.

Coach will cut its planned expansion in North America from about 40 new stores a year to about 20. However, it said its plans for new stores in China remain unchanged. It said it saw double-digit same-store sales growth in China during the fourth quarter.

According to the Financial Times, ceo Lew Frankfort described the recent Christmas period as the worst he had seen in 30 years but Coach had avoided discounting prices in its full-price stores to protect its brand.

“We will continue to protect our brand,” Frankfort said, although the strategy meant that Coach’s more than 300 full-price stores had seen declining traffic at a time when “virtually the entire mall was on sale”.

In addition to a previously announced 13 percent fall in North American same-store sales, the fashion luggage and accessories goods company reported a 19 percent drop in indirect sales through US department stores.

Frankfort said discounting by department stores had reached “unprecedented levels,” with Coach opting to exclude its products from the 50- to 75-percent price cuts seen in luxury stores such as Saks and Neiman Marcus.