Wrong Prescription for Coach’s Ills

Coach continues its downward slide. Sales in 3rd quarter 2015, dropped 15%. Some blame currency issues and the over-proliferation of outlet stores. Note to leadership, it’s the merchandise. Stuart Vevers strategy is stodgy, European and not much fun. The sleepy handbags are more matron than Millennial. Note to pundits, Millennials love outlet shopping. I still contend that their turnaround strategy is seriously flawed and too dependent on overly competitive apparel. I wrote this post in 2014 and not much has changed except Michael Kors and Kate Spade are hitting some headwinds, as well.

Coach’s 2014 first quarter profit fell 20%, while aspirational fashion rivals such as Michael Kors and Kate Spade continue to ratchet impressive gains. Coach experienced a steep drop in North American accessories sales. Coach’s strategy for slumping sales is a planned full lifestyle assortment, to include apparel and a greater emphasis on higher priced bags over $400, the volume sweet spot.  They recently hired a new creative director Stuart Vevers, to take over for Reed Krakoff (who is resigning); his first product introductions will be in Fall 2014.

Coach spring 2014 styles

Coach spring 2014 styles

As a Coach watcher and stock holder, this strategy goes down like bad medicine. Instead of aiming to win in the sweet spot, they are abdicating to the competition. Michael Kors’ apparel is a footnote to his successful handbags, watches and shoes. Kate Spade offers some of the most whimsical, colorful, bags, shoes and accessories and apparel is secondary. Tory Burch is a shoe and bag story with apparel paling in comparison.

Accessories are the democratic categories in which women of all ages and sizes can play, women’s apparel is stuck in a highly competitive funk.

Coach was riding high, in the early 2000’s. Their then colorful, fresh, “C” logoed bags were the “it” bags for the aspirational designer masses. Over time, they became ubiquitous, as every hairdresser and soccer mom carried them. As they down-trended, they didn’t follow with renewed  innovation, instead made the critical mistake of looking back and doing a rehash of the sturdy, vintage Legacy styles. These unrefined bags, although colorful, looked like a clunky 1980’s LeBaron instead of a chic 2013 Audi. The competition was forging ahead with exciting materials, color and patterns, like Michael Kors’ glam styles, Kate Spade’s playful totes and tech cases, the silicone Furla Candy bag and styles by Rebecca Minkoff, Marc Jacobs, Ted Baker and Longchamp.

The current assortment is sleepy at best. It feels like a lightly-veiled nod to Salvatore Ferragamo. They played it safe and sexless. There is no emotional must-have draw. Even with 25% off coupons, one is hard pressed to spend the deal. The prospect of a larger selection in the $600 plus range is a miscalculation of opportunity. They need to focus on modern, forward  materials, shapes and details in the $400 range sweet spot; then offer additional showstoppers in the $600 plus range.

Coach went too safe.

Coach went too safe.

A  key asset for Coach is their well-priced, quality shoe line. They offer slightly more wearable shoe heights than Kors and at prices lower than Kate Spade. I hope they don’t think they need to raise prices and heel heights to get a new customer. Maintain the $198 average price point and expand the selection to include more options of fashion-forward sandals, pumps, wedges, loafers and boots.

This great American brand has had a small stumble. When you take fashion risks as good brands do, you will trip-up sometimes. This brand has a cold, but certainly isn’t terminal. They just need the right prescription for renewed health.

Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel, footwear, consumer products and branding agencies. Follow me to get the latest posts

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Spring 2015 Fashion – Green Energy

Green the color of optimism, growth, renewal and happiness. Couldn’t we all use some of that right now?

Bountiful greens are the biggest trend for spring 2015 fashion. Expect the unexpected, you will see them everywhere including sportswear, handbags, lingerie, active wear, swim, footwear , accessories, jewelry and in beauty. These exuberant greens range from the palest mint, jade, spearmint to deep dark forest. They cast slightly blue. Green can be a tad retro, bohemian or classic. This is the most sustainable form of green energy. Check out COLORSCOOP, the best new women’s color trend forecast!

Fresh greens are the big news for spring 2015!

Fresh greens are the big news for spring 2015!

Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel,  footwear, consumer products and branding agencies. Follow me to get the latest posts

Coral – Must-Have Color Summer 2013

Coral - Spring-Summer 2013's Must-Have Color

Coral – Spring-Summer 2013’s Must-Have Color

Spring/summer 2013’s must-have color is pink’s fraternal twin coral. Coral conjures thoughts of beaches, bikinis and chilled Bellini’s. Fashion is on a feminine trajectory and these pinky-orange hues are found in every level of the apparel (and home) markets for tops, jeans, active wear, swimwear, lingerie, dresses, handbags, footwear, jewelry, etc.

Pale lady slipper, peach, melon to rich begonia, this blushing beauty flatters all skin tones. It is precious and precocious, tender and tantalizing. Whatever the shade, it packs a lady-like punch and says girly girl from a thousand feet.

Pair coral tonally, with pure white or soft neutrals. Expect these trending hues to bloom bigger for spring/summer 2014.

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

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

6 Reasons Fashion Brands Fail to Thrive

Many apparel, shoe or accessory brands fail to grow, thrive or evolve over time. Fashion is discretionary. Clothing, footwear,  jewelry, handbags and accessories are emotionally driven purchases. Brands are much more than products, they are a total experience.

Consumers must identify with the implied promise of the brand to become loyal customers. Here is a slide show of the 6 main reasons that fashion brands fail to thrive and some of the stellar brands that are knocking it out of the park:

Incredible Ippolita

Ippolita's Rose collection

If you asked an average American woman to name five fine jewelry brands she would probably say Tiffany’s, David Yurman, Harry Winston and after that would probably be left scratching her head for more. Even though the fine jewelry industry is in the “fashion business”, somehow fine jewelry brands don’t seem to bubble up in the public consciousness. I think the industry has billed themselves as sellers of boring commodities versus being  “must-have”  fashion brands in their own right. It is an industry asleep at the wheel, still dominated by small local retailers and dull-as-dust mall stores. Most style icons pine for the bolder statements created  by the so-called “fashion jewelry”  (costume) companies, currently dominated  by Kate Spade, Michael Kors, Marc Jacobs, J Crew, BCBG and others.

Then there is Ippolita. This Tuscan-born, Italian-American designer of contemporary fine jewelry is soon-to-be a bigger household name. Ippolita is coming on strong with her marketing of modern precious jewelry for the fashion obsessed. Her online and traditional media is sexy and compelling in a trendsetting, casual style. This multi-disciplinary sculptress, glass artist and acclaimed jewelry designer started in private label costume jewelry in the 90’s and then introduced her first fine jewelry collection in 2000.

Her  modern risk-taking designs and casually layered style is destined for brand greatness in a sea of solitaires and yawn-inducing tennis bracelets. She layers bold, handcrafted pieces encrusted with gems in a modern melange.  Wake up and smell the espresso, this quiet little Ferrari is passing everyone on the right! Ippolita is poised to take advantage of the sturdy luxury market; as she doesn’t dish up the same safe, traditional styling found in most fine jewelry.

I have particularly fallen for her Riviera Sky (multi-colored stones set in 18K gold), Glamazon (bold silver and gold classic statement pieces like 3″ hoops and chains), Rock Candy (gemstones set in contemporary gold and silver settings) and Rose (rose gold collection of solid metals).

The sexy, modern Wicked collection.

Big Runway for Michael Kors

The Gia Satchel from Michael Kors for Spring 2012.

The Gold Python Michael Kors "Gia" Satchel

Michael Kors Holdings, LTD recently announced their first quarterly earning report since their recent successful IPO, on December 15. Not surprisingly , they were exceptional, in fact their revenues were up for third quarter by 67.9% and comp store sales were up 38%. The red-hot company is planning to open 20-30 more stores in North America in fiscal 2013, as well as many more stores in Europe and Japan.

Michael Kors’ business today is a hard-won success after a long career of ups and downs. His appearance in Project Runway helped to make him a household name in the US, but his brand speaks for itself. The company offers the designer Michael Kors luxury collection and the aspirational Michael Michael Kors lower priced line. He has created an urbane brand of sexy, glamorous pieces for sophisticated city slickers (or wannabes). There is no doubt about what you can expect in his free-standing stores: sharp and sexy shoes, statement signature bags, bold  jewelry, power-hungry watches and tight collections of sleek, wearable apparel. His direct, social and online marketing are unswervingly messaged. 

Clear brand vision gets rewarded with growth consistent with the size of your market niche, i.e. Ralph Lauren, Coach, Anthroplogie, Lululemon, Vera Bradley, etc. Kors aspirational luxury niche is a large and viable one, so he has a big growth trajectory ahead of him. The Michael Kors brand isn’t yet as well-known as Coach, which makes his future prospects even greater. There aren’t many mall competitors other than BCBG, chasing his fashion saavy, urbane audience. BCBG tends to be a tad more youthful and contemporary so their apparel fits are more challenging to an audience over 40. Smartly, Michael Kors has focused on ageless accessories, apparel is more of a punctuation to the story. (BCBG has some very formidable accessories, but focuses on clothing.) Kors reports that 62.3% of sales come from accessories and fragrances. Women’s apparel in general, has become more of a commodity, where bags and shoes still offer better turns and pricing power.

The runway is long and wide for a big take-off for Michael Kors!

Copper Market

Sexy soft, metallic and deep copper tones continue for spring 2012.

Color for Spring 2012 women’s apparel and accessories seem divided in two diametrically opposed camps…sizzling hot, over-the-top brights and barely there nudes. These copper-toned, blushing beauties have been around for a few seasons, but seem to be driving the vice of copper even higher!

These “catch me if you can” colors are tender and taunting at the same time. They can be found all over the market from the dainty sequined top and skirt  from BCBG (lower right), Vince’s kitten soft sweater and dress (lower left). the caged Prada heel (upper right) and sporty items like red-hot Sperry’s metallic copper Top-Sider in the middle. They are hugely popular in rose gold toned jewelry and watches (I love  Ippolita’s Rose collection!) and are prevalent in nail colors and beauty, too.

If you are Geisha-pale, a true blond, red-head or rich dark-skinned you can rock these sexy shades. If you are somewhere in the middle, try wearing them on the bottom or on top over a pop of white or black to supply contrasting support. There is something magic about this color family. It is so feminine and seductively suggestive that it has transformational effects on the wearer.

Copper tones are the perfect expression of the mega-watt, lady-like trend in fashion. It is the counter punch to the active-inspired sporty styles that also dominate this spring.

Fresh Greens

Fresh-picked greens are sprouting up everywhere for spring 2012.

 

Sprouting amongst the last of the holiday sale merchandise are sweet tendrils of  green…chartreuse, citrine, neon, and washed limes and emeralds. These fresh-picked greens are easy pickin’s to get a shot of modern, pre-spring pop!  These op-art shades are making their spring début on everything from active yoga, apparel, athletic shoes, handbags, Uggs, boots, skirts, tops, jackets, scarves and jewelry. Luscious greens are found on tabletop and home furnishings, too.

These eclectic shades of green look especially de rigueur played against neutrals such as greys, white, navy and black. They also hit-it-out -of-the-park in colorblocked combinations…two or more greens at the same time.

 I never been a green person, but I find myself compelled to buy something chartruese this season. Green stands for optimism and renewal. Two things we could use a little more of in 2012. Are you going green this season?

 
 
 
 

Tiffany’s Breakfast

11/30/12  Tiffany’s shares slid 6.25% yesterday as their 3rd quarter results missed Wall Street expectations. The lack of demand is blamed on high diamond and precious metal prices. I am not buying this, as it been the case for several years. Mark Aaron, Tiffany’s investor relations chief told the Wall Street Journal that weak consumer demand was “part of the reason”, especially sales of silver jewelry.

I believe, as I did last January, that they haven’t introduced any exciting collections lately in the aspirational luxury (silver) area. Whimsical fashion and inspirational jewelry like charm bracelets, have been on fire in recent years. They have abdicated this to the likes of Pandora and others. Mark Aaron admitted to the WSJ, that “merchandise priced above $500 dollars saw in most cases, growth in sales and units”.

The aspirational luxury customer loves Tiffany’s, when there is a compelling assortment.

1/16/2012

Tiffany’s cut their earnings outlook for 2011, citing a weakness in North America for 4th quarter…a dismal 4% gain in North American sales. Analysts are trying to make sense of it suggesting that perhaps the fine jewelry customer is buying technology instead. This doesn’t square with the fact that other luxury retailers had a decent holiday and iPhones and iPads aren’t that expensive.

My take on the situation is lack of exciting new items for the aspirational customer in Tiffany’s this fall like their “well-knocked off”  key collection in the past. Other stores are eating Tiffany’s breakfast. I saw sign-in sheets and long

Tiffany’s collection of bags by designers Lambertson & Truex are exceptionally beautiful!

lines outside the Pandora jewelry stores,  just for chance to get a few expensive baubles for their already “over-indulged” teens, wives and girl friends.

On a positive note, their bags by designers Lambertson and Truex take my breath away!

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

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