Coach affordable luxury

Coach Outlet handbags company said margins could be pressured in the coming quarters given higher leather prices in recent months."NEW NORMAL"
Coach has positioned itself in the "affordable luxury" segment in the past two years as shoppers have cut back on discretionary spending, lowering average prices on its handbags by about 10 percent and expanding its outlet stores.
For example, many handbags in its "Poppy" collection retail for $298 and less, reflecting what Chief Executive Lew Frankfort told Reuters was the "new normal" in high end consumption. That compares with other handbags that can run to about $900 and the thousands that Louis Vuitton bags can cost.
Sales of handbags and accessories at Cheap coach handbags North American stores rose 20 percent and the company is planning to introduce other moderately priced handbag lines in the coming months.
"The luxury consumer is cautious, but willing to spend for those products she feels will enhance her sense of well being," Frankfort told Reuters.
Also reflecting a longer-term shift to frugality among high-end shoppers, Neiman Marcus Group Inc [NMRCUS.UL] announced on Tuesday a new outlet chain called Last Call Studio and Saks Inc (SKS.N) has closed a number of full-line department stores this year, even as it expands its Off 5th outlet chain.
The company continued its push into China, opening eight new stores there, bringing the total to 49, and said same-store sales there had risen at a double-digit percentage clip. In Europe, Coach Poppy plans to open a flagship store on London's Bond Street, as well as new stores in France, Spain and Portugal in the coming months as it seeks to benefit from a cutback on luxury spending there and take some market share from high end companies such as Hermes (HRMS.PA) and LVMH (LVMH.PA).
LVMH took a 17.1 percent stake in Hermes this week and Tod's (TOD.MI) CEO Diego Della Valle increased his stake in Saks to 19 percent last week, raising the specter of more deal-making in the luxury industry.
Although Coach is growing quickly and will benefit from shoppers' new, more modest purchasing power, its market value of $14.4 billion would make it a "hard pill to swallow" for any potential suitor and require taking on a lot of debt, Swinand said. Still, Coach Bags's ability to generate cash could make it attractive, he added. (Reporting by Phil Wahba; editing by Derek Caney, John Wallace, Dave Zimmerman and Andre Grenon)