"Turnarounds take time." For brands looking to right their flagging businesses, that phrase, usually uttered by the CEO, is a common part of quarterly earnings webcasts with investors and analysts. Time, and maybe a period of shaky sales as those changes take place. Such is the case at Coach, which saw its revenue drop 12 percent to $1 billion in the fourth quarter of the year as it continues to give its stores sleek makeovers and cut down on sales events in the hope of elevating its image.
For the full financial year, which ended June 27, Coach's sales dropped from $4.81 billion in 2014 to $4.19 billion. In North America, that was a 20 percent dip: $691 million to $556 million.
Again, that partly owes to the fact that Coach is no longer using frequent sales events to lure in customers — an effort to position itself closer to the luxury sphere. In the last few quarters, it's reduced the cadence of its flash sales from three a week last year to two a month; instead, Coach held a semi-annual sale event this summer, which the executive team says could be good way to recruit new customers. But it's going to take time for shoppers to stop looking to Coach for deals and to start buying at full price again. Therein lies the waiting game.
In the meantime, Coach has also been going hard on its store renovation project. At this point, 150 locations globally have been made over — the concept being "modern luxury" — with 70 of those in the U.S. And the brand, which has been looking to win over the fashion community ever since Creative Director Stuart Vevers presented his first collection at New York Fashion Week last February, is now pushing its industry position with greater confidence: according to CEO Victor Luis, Coach will host its first women's runway show at Fashion Week this September.