Upscale retailer Coach Inc warned of lower sales next year and said it would close about 70 stores in North America as it struggles against fast-growing rivals in its biggest market. Coach’s stock fell as much as 11 per cent and was one of the top losers on the New York Stock Exchange on Thursday.
The clothes, shoes and handbags retailer said it expected revenue to fall in low double digits in percentage terms in the year ending next June, with North American same-store sales falling in “high teens” in percentage terms.
The decline in same-store sales, or sales at stores open at least a year, could be deeper due to lower online sales, the company said in a presentation to investors.
Known for its Poppy handbags, the company has struggled to keep up with rivals Kate Spade & Co and Michael Kors Holdings Ltd.
“They (Coach) over invested in their outlets and they under estimated their brand,” Morningstar analyst Paul Swinand told Reuters.
Coach said last year it would expand its assortment and become a so-called lifestyle brand, with a bigger selection of shoes and clothes than before, in addition to handbags.
The company said on Thursday it would spend more on marketing and strengthen its presence in key markets with flagship stores.
“Consumers visiting our outlet stores will see less logo, more leather, more lifestyle categories,” Coach’s North America retail head Francine Della Badia said, adding that the company had seen demand for footwear and outerwear.
Coach also said that it would start holding sales twice a year to win back customers.
The company plans to close two metropolitan outlets and combine 13 standalone stores catering to men with existing women’s stores.
As of June 2013, Coach had 351 stores and 193 factory outlets in North America, where it gets about 70 per cent of its revenue.
Coach’s North America same-store sales fell 21 per cent in the three months ended March 29, the fourth straight quarterly decline.
The company’s shares were down 9 per cent at $35.83 (U.S.) in late afternoon trading.
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