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Coach's Loyal Customers Put It in 'Sweet Spot': CEO

Tuesday, 24 Jan 2012 | 5:54 PM ET

Coach is in the "sweet spot" thanks to loyal female customers who keep buying its accessories, CEO Lew Frankfort told CNBC.

Shoppers look at handbags at a Coach store in Pasadena, California.
David McNew | Getty Images
Shoppers look at handbags at a Coach store in Pasadena, California.

"Women are particularly brand-loyal," he said Tuesday, hours after the company reported a 15-percent rise in second-quarter net income. "They tend to stay with a handful of brands if you give them product that’s right. So we have built a loyal consumer base and business is growing both in same-store sales, productivity and through distribution."

Coach expects to expand in China, where Frankfort said sales are growing at an impressive rate and will "eclipse Japan in sales in just the next few years."'

Its move into Europe is "in its infancy," he said. "We're developing a foundation for the long term." The U.K. business is "gaining traction" but at the moment Europe's overall financial problems are "not meaningful" to Coach's results.

Coach CEO Talks Earnings, Consumer
Lew Frankfort, Coach Chairman & CEO, discusses earnings and whether the consumer is showing strength.

The main focus is the U.S., which Frankfort said makes up 65 percent of Coach's business and is growing at 15 percent a year. Within that, the women’s accessories category is growing at 5 percent to 10 percent a year."

What about men? Coach has been selling men's wallets for years, Frankfort said. Its "man purse" has been doing very well around the world and is "doing remarkably well" in the U.S., he said, particularly when you consider that the company had "lower expectations in the United States."

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