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Coach Opens Discount Outlet Stores and Immediately Regrets The Decision

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Coach Inc. can’t seem to get it all right. According to Bloomberg News, the luxury brand rejoiced as its profits exceed expectations, but this breath of relief was followed by a gasp for air – and another, and another.

The Business of Fashion reported that sales declined just over seven percent this past quarter, which marks the fourth regression in a row. “The fourth quarter capped a challenging year for the company, most notably in the North America women’s bag and accessory business,” said Chief Executive Officer Victor Luis, according to The Independent.

The root of this downfall is accredited to the decision to open up discount outlet stores throughout the United States. As a result, customers had access to these luxury handbags at much cheaper prices, which caused the company to lose business and prestige.

This error “is a pretty classic case of brand mismanagement,” said Steven Dennis, founder of SageBerry Consulting LLC, according to The Business of Fashion. “They allowed themselves to lose focus. They made a lot of mistakes in the business. They have tarnished the brand.”

Luis has remained surprisingly positive throughout this setback, however, pointing out the positives of the company’s journey. He discussed how Chinese sales reached more than $500 million and how menswear exceeded $700 million for the year.

In order to keep the high-end business alive, Luis plans to close approximately 70 stores, open or refashion full-priced stores in desirable markets, eliminate 150 jobs and diminish the regularity of discount prices, according to The Business of Fashion.

Coach may have made a detrimental mistake, but this 73-year-old designer brand won’t let the past mirror the outlook of its future. Still in charge of 23 percent of the U.S. handbag industry, this company has no doubt it will survive and advance.




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