NEW YORK — In an unusually large multiple store deal, Coach Inc. will open 20 stores and expand 10 others inside malls owned by Simon Property Group over a two-year period.
"The locations are designated and the economics are agreed upon. We are finalizing the paperwork," said Richard Sokolov, president and chief operating officer of Simon Property.
A Coach spokeswoman said locations will be announced closer to when the stores open and after leases are signed. The first of the 20 is expected to open in July, around the end of Coach's fiscal year.
"It's not uncommon for us to do multiple store deals [with developers], but they tend to be two or three locations," she added. "We are very excited to do a multiproperty deal. It enables us to plan early for manpower, construction and costs." Asked if Coach gets a break on the rent considering the scope of the deal, she replied, "We have always had excellent lease arrangements with Simon and this will be no exception."
Added Sokolov, "This is really just the result of our normal portfolio review process where we try to expose our portfolio to the tenants we want to expand with. But what makes this unusual is that we basically had a session with the senior leadership of both companies and we came up with a series of deals.
"It's not a master lease or blanket deal. The thing that makes this exciting is it's a substantial percentage of [Coach's] new store program, it demonstrates the strength of our overall portfolio and we were able to create a large number of deals in one sitting, if you will."
Other tenants might execute a similar number of leases during a year, but they weren't necessarily in "a similar coordinated fashion," Sokolov noted. Each store has its own lease, he said.
In its announcement, Coach said the arrangement was a "deal in principle" and "the first of its kind" for the company. It only involves full-price stores, not outlets, the company added.
As of the end of December, Coach in the U.S. operated 201 stores and 84 outlets. Coach also operates 109 stores in Japan and two in Canada. In addition, Coach distributes to about 1,000 department and specialty stores in the U.S., and has another 100 points of distribution abroad through either licensed shops, third-party arrangements or wholesaling.
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