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.
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.