Coach Outlet Business is Thriving

Coach Inc. (New York) has found that its discount outlet business has become more profitable than its full-price-store locations.

According to Fay Landes, an analyst at Cowen & Co., the outlet business has grown to 60 percent of the luxury company’s North American sales. Outlet channels generate sales of more than $2000 per square foot for Coach, and regular retail less than $1400.

However, Landes said, “Consumers may increasingly perceive Coach as an off-price brand. Our findings raise a concern of possible over-democratization of the brand, which may counter efforts to appeal to aspirational shoppers and build a sense of exclusivity and cachet.”

As reported by Bloomberg News, Coach contends that it is serving two separate markets. Its outlet shopper is different from its regular-price shopper – older, price-conscious, willing to wait for styles rather than demanding whatever is hot right now.

It also has said that about 85 percent of what is sold in its factory outlets are made for that channel alone. The remaining 15 percent is made up of discontinued products from past seasons that are no longer available in its regular priced stores. And its outlets are usually far-removed from its regular-priced locations.