Coach says its shift last year to lower price points continues to pay off, and that it will keep up the momentum by adding even more price assortment to its luxury offerings.
"We feel very good about our positioning," chairman/CEO Lew Frankfort told investors at the Piper Jaffray 30th Annual Consumer Conference in New York on Tuesday. "Consumers have responded very well to shifting assortments, and the greater opportunity to purchase Coach at a lower price than a year ago."
The company began the shift last year with the introduction of its Poppy line, Michael Tucci, president of the chain's retail division, explained at the event, which was webcast. That move, he says, took average ticket sales down to about $300, "the sweet spot. Poppy is our introductory price point -- we didn't move like-for-like price points down, but we did introduce lower-priced products through the Poppy line." Poppy bags are priced around $200, while many in its Madison collection are close to $400, with some as high as $800.
Tucci says that handbag sales have improved overall, and that while Coach will continue to beef up selection at the low end through Poppy and at the high end through Madison, "we are working the mix to focus on that center opportunity, in lines like Kristin and Julia, in the $250 to $350 range, to drive further growth. That is the most significant opportunity for us in 2011."
He says that online sales continue to be its fastest-growing full-price channel and that the brand is approaching 1 million Facebook fans.
Frankfort was also bullish on the company's prospects in Europe, with its French stores doing well, and expansion on tap in such markets as Spain and the U.K., despite Europe's troubled economies. "Europe is not growing. But in many ways," he says, "that is encouraging for Coach. Consumers there are looking for great products that are relevant, innovative, and priced well."
And as an accessible luxury brand, we believe we give them an alternative to European luxury brands -- with excellent workmanship -- at a fraction of the price, in a retail environment that is warm." About half its business in France is from French consumers, he says, with the other half coming from international travelers, "and because the strength of our franchise is Asia, especially in Japan and China, "we benefit from those international travelers as well."
Still, he cautioned the audience about being too optimistic. "The consumer is not back," warns Frankfort. "She is cautious and careful, and she is not spending at the levels she spent at in 2006 and 2007. But is spending somewhat more than she did last year."