"Coach's net sales declined 24 percent in North America in the quarter, which we think is the company's worst performance on record," Cantor Fitzgerald analyst Laura Champine wrote in a note to investors. "By comparison, management commented that the broader North American handbag and leather goods market grew in the mid-single digits in the March quarter."
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The company's comparable-store sales in the U.S. also decelerated from the previous quarter, declining 23 percent. Coach's earnings per share fell nearly 50 percent in the quarter, which was "well worse" than the 30 percent drop in the first and second quarters, Wells Fargo analyst Paul Lejuez said.
Coach is attempting to turn around a sales bleed in the United States, where robust promotions and a heavily weighted outlet strategy caused the brand, which is facing increased competition from affordable luxury labels including Michael Kors and Tory Burch, to lose its status with shoppers. To do so, it's tapped a new creative chief, Stuart Vevers, whose design background includes high-fashion labels Mulberry and Loewe.
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In addition to elevating the product and cutting back on promotions, the company is also overhauling its bricks-and-mortar presence, giving its shops what the firm has described as a more modern, elegant feel. It's also updating its look at department stores, and expects to convert more than 300 locations into an open-concept format by the end of the next quarter.