What Is Coach’s Plan With Regards To Its Store Footprint?

COH: Coach logo

Coach‘s (NYSE:COH) retail stores in North America are located in regional shopping centers, as well as metropolitan areas throughout the US, Canada, and Puerto Rico. Their flagship stores offer the widest assortment of Coach brand products, and are located in high-visibility locations. During FY 2016 (year ended June 2016), the company decreased its retail store count and its total square footage, as the company continues to optimize its real estate position. This trend is expected to continue in the next fiscal year, with the company anticipating a net closure of 10 to 15 stores in the region. The company also plans to renovate more stores into the new luxury concept, which have been performing better in the past two quarters than its other stores.

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The company’s outlet stores in North America sell products which are manufactured solely for such stores, as well as discounted retail inventory. Such stores are designed to target value-oriented customers. While in the past, the company had aggressively expanded such stores, the company has had to slam the brakes on this strategy, as most consumers chose to buy the brand’s products at cheaper prices available in these stores. This was not only having a negative impact on the company’s sales and margins, but also on its brand image. Over the next few years, the company does not expect to see any meaningful growth in the outlet store footage.

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Internationally, Coach operates through department store concession shop-in-shop locations, as well as retail and outlet stores, besides its e-commerce websites. This segment is expected to witness a modest growth in store count over the next few years, particularly within mainland China and Europe, which have been seeing strong sales growth recently.

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