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Coach Sales Are Finally Growing Again

The American company is still working to be seen as a "house of modern luxury brands."
Coach fall 2016. Photo: Imaxtree

Coach fall 2016. Photo: Imaxtree

It's been a long road for Coach as it's spent the past couple of years working to drum up sales and paint itself in a more luxurious, fashion-forward image. And while it hasn't yet reached the end of that road, it has hit an important marker: a return to positive sales and profit growth. After several consecutive quarters of decline, the American brand announced Tuesday morning that revenue grew 3 percent to $954 million for the third fiscal quarter of 2016. Coach, Inc. as a whole saw an 11 percent increase in sales to $1.03 billion.

The growth "reflected the consistent execution of the transformation initiatives put into place nearly two years ago," said Coach CEO Victor Luis in a statement, referring to store redesigns, reduction of promotions, Steven Meisel-lensed ad campaigns, NYFW runway shows and product expansion, including ready-to-wear designed by creative director Stuart Vevers, which first hit stores in the fall of 2014 (though handbags were still a big sales driver this quarter). Also contributing to Coach, Inc.'s success was the consistently solid Stuart Weitzman, which it acquired last year; the luxury footwear brand brought in $79 million for the company this quarter. (The company also notes that costs associated with the acquisition put a temporary dent in profits.) 

Sales growth aside, Luis was most emphatic about the changing perception of Coach, "from a specialty retailer to a house of modern luxury brands," as he put it. While we think "house of modern luxury brands" sounds a little inflated, Coach seems to have succeeded in elevating its image without alienating customers, given this quarter's results, and that's crucial.

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Moving forward, Luis said the brand plans to expand the menswear presence in Coach stores, describing the category as a "$1 billion opportunity." Coach also celebrates its 75th anniversary this year, and to celebrate, plans to announce a collaboration with "another storied American brand." As for who that could be, your guess is as good as ours.

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