Coach's turnaround is officially a success, with the brand reporting another great fiscal quarter that brought double-digit earnings growth at the end of 2016. On an earnings call Tuesday morning, President North America and Marketing of Coach Andre Cohen credited the Stuart Vevers-driven 1941 line for bringing about the boost in sales.
"There are two groups of consumers responding to 1941 — of course there are new consumers who hadn't connected with the brand in the past," Cohen said. "More surprisingly, we're finding a lot of lapsed consumers returning to the brand who left during our logo heyday are coming back because of the understated leather aesthetic of 1941."
Despite the fact that the fashion is helping to drive sales, Coach has no intentions of becoming an apparel-focused brand moving forward. CEO Victor Luis promised that handbags and leather goods would "remain a competency" of the brand, even as Coach expands into other categories and begins to build out a luxury conglomorate through acquisitions. "We're not interested in getting into a basics business," he said on the call.
Additionally, Coach Inc. has been very pleased with the purchase of Stuart Weitzman, a brand they consider an asset in the global luxury market. In fact, the two brands will influence each other this year: There are plans for Stuart Weitzman to expand into handbags in the near future, and Coach intends to take back its footwear license, bringing shoe design and production in-house. Citing a combined $80 billion global business opportunity, Luis says that footwear, handbags and outerwear will be the major focus of the brand. Those three categories will also determine any future acquisitions by Coach Inc.
"As we think about acquisitions beyond Stuart Weitzman, we've been very consistent for years now in our capital allocation strategy," Luis says. "We've been excited thinking about the three categories that we think are the closest to us and the most branded in the fashion category, and that would be our strategy. We're not interested in turnaround plays."
And while the future of influencer marketing may be in flux, it's proven a great success for Coach, which intends to continue influencer seeding. In 2017, they'll have one of the biggest influencers on the market on their side: Selena Gomez, who announced a collaboration with the brand in December of last year. Coach is excited for Gomez to "amplify" the Coach message through social media, and with an Instagram following that's currently 108 million strong, she's certainly a safe bet in that sphere.