Coach – Stellar to Stumble

On the short-list of first-class American fashion brands, Coach certainly makes the top ten. The nature of market leaders is their willingness to take chances. No one becomes an Olympic skater holding the rail.

Coach fourth quarter 2012 North American sales were down 2% over last year, which sent the stock tumbling this week, in spite of increased international sales. North America accounts for two-thirds of the company’s business.

I have great respect for the aspirational luxury bag and accessory seller. They have turned a 72-year-old leathery dowager into a fashion powerhouse with their risk taking market leadership. There are far too many lackluster brands, that stand for nothing. I give them credit for ground breaking newness and willingness to take bold moves.

As an avid Coach watcher, the answer for the poor results is obvious. For many successful years, they addicted their logo-adoring masses to fresh shapes and colors of their iconic fabric “C” patterns. These signature looks fulfilled the fantasies of mainstream wanna-be social climbers. Unfortunately, the patterned bags have become, all too common on the arms of every stroller pusher and tweeny bopper in the mall.

Fall 2012 Coach Legacy bags

Fall 2012 Coach Legacy bags

They saw this coming. In second half of 2012, they took a radical step and introduced the Legacy collection. I never warmed up to this collection of vintage leather Coach styles in bold colors. They bet the ranch on Legacy and it dominated the second half assortment. I awaited its pending arrival and wanted to love it. Somehow, it didn’t feel modern, and the traditional leathers seemed a bit dowdy in a digital world. Perhaps it is the sea of wristlets and cross-body bags, aimed at an over-indulged teen? It doesn’t have the freshness of their more innovative styling. The only thing it had going for it was color. I give them an A+ for trying. This is the fashion business and leaders sometimes stumble.

CEO, Lew Frankfort is blaming the lack of demand on “competition.” Some say Michael Kors is taking a bigger share. I think the iconic Kors bags with the MK charm, are getting a tad stale, too. Kors does a larger shoe collection and dominates in uber-hot fashion watches. Kors stores have a consistent mix of accessories, apparel and shoes and isn’t reaching for an entry-level teen. I think Marc Jacobs, Kate Spade, Tory Burch and others are sucking the aspirational luxury winds in bags.

Coach won’t stay on the rails for long. This champion will bounce back. In bags, I think they need to explore more luxe leathers, modern materials like colorful patent leather and even silicone, as well as bold new shapes. They are talking about relaunching their shoe collection. I think their shoes offer tremendous value in terms of fashion quality to price. Expanding fashion jewelry and watches is an opportunity as well. Stay tuned. See Coach.com

Fall 2012 Coach loafers - A modern twist on a classic

Fall 2012 Coach loafers – A modern twist on a classic

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies. Follow me to get the latest posts

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Feeding Frenzy – Lululemon

I admit it, I’m a dyed-in-the-Lycra, full-blown fan of Lululemon Athletica. I was one of the sharks in the holiday feeding frenzy for all things Lulu. On a visit last week after Christmas, I could hardly move around the 60 or so people I counted in the little store lusting after Lulu. They were spending gift cards, making exchanges and if they expected markdowns, they were sorely disappointed. This fashionable Canadian purveyor of athletic clothing has risen to cult status at full-price. This is a true fairy-tale ending to a lackluster holiday season for most retailers.

There are always sexy and functional sports bras and tops.

There are always sexy and functional sports bras and tops.

In a highly competitive apparel market Lululemon has proven that there is always still room for fresh design and a compelling brand experience. (I think the stores are bit dark, though). They churn out unique and creative silhouettes that flatter the athletic and not-so-athletic bodies of their adoring masses. They create demand for their feminine and tastefully sexy styles. They tout performance fabrications for real yoga and running aficionados, but the rest of us just love the great quality and are willing to pay for it. They have broken every rule of the old footwear apparel players. They make expensive, feminine, comfortable, durable and sometimes radical styles for women and men. They almost singlehandedly started the trend for yoga wear as everyday wear in and out of the gym.

Certainly upper management from the major athletic companies are sending spy drones in the stores to figure out their secret sauce. They are buying and dissecting garments and creating their own vanilla versions. This is a recipe without all the ingredients. They are missing the point; it is Lululemon’s originality that makes it special. It is getting to the finish line first. Who cares about second place?

The opportunity for growth for Lululemon is still very great, as they are still far from a household name. They could benefit from larger stores and certainly more men’s product. Girls would be a smash hit, too. If I was a Nordstrom or Bloomingdales’s buyer, I would be begging for a wholesale line.

December Lululemon deliveries included signature pink and black jackets and a unique lace print used on tops and bottoms.

December Lululemon deliveries included signature pink and black jackets and a unique lace print used on tops and bottoms.

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies. Follow me to get the latest posts

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