Coach to focus on retail outlet division

New York--As it struggles to compete with fast-growing rivals, Coach Inc. will close a number of full-line stores next year and revamp the brand’s outlet business, the company said during its recent analyst and investor day.

To remain competitive in the retail environment, Coach will restructure its North American business, closing 70 of its underperforming full-line stores in the region in 2015, while opening and combining a number of outlets as it overhauls the product offering and promotion pricing across those stores.

Coach said last week it will also close two existing outlet stores, but will open 10 new dual-gender locations while also consolidating 13 men’s outlet stores into existing women’s stores.

“We need to bring more relevancy to our stores through innovative and compelling product,” said Francine Della Badia, president of North America retail at Coach, during the presentation. “That means consumers visiting our outlet stores will see less logo, more leather, more lifestyle categories.”

Coach Creative Director Stuart Vevers will introduce outlet items, including accessories, that are more in tune with the brand’s ready-to-wear line as it shifts away from pieces emblazoned with its well-known logo pattern.

The company also will reduce promotional pricing in the outlets to drive the discount rate down and ticket prices up, as well as revamp their electronic outlet store early next year.

With this news, Coach joins a number of retailers, both high-end and mid-tier, that have begun investing heavily in the outlet division of their businesses as one of the strongest pathways for growth.

Nordstrom currently has more Rack stores than full-line locations. The retailer told National Jeweler earlier this year that it plans to open a total of 27 new Rack stores in 2014, as compared with only three full-line stores. Meanwhile, by the end of 2015, more than 60 percent of Saks stores will be off-price locations.

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Among specialty jewelers, Signet Jewelers Ltd.--operator of Kay Jewelers, Jared the Galleria of Jewelry, and soon Zale Corp.--and Borsheims are also investing in their outlet segments.

Signet purchased Ultra Diamonds, a chain consisting mainly of outlet stores, in 2012, and is now converting a number of those stores into Jared Vault stores. Omaha, Neb.-based Borsheims chose an outlet mall for its second location, which opened in November 2013.