Coach Inc.’s in-store traffic is on the decline, compared to the firm’s publicly listed competitors Kate Spade & Co. and Michael Kors Holdings Inc. According to a report by industry analysts Corinna Freedman and Brennan Matthews of BB&T Capital Markets, “Coach is taking deeper discounts, while traffic remains soft.”
Freedman and Matthews visited Macy’s Herald Square flagship and felt that, “[the] channel check provides further evidence of reduced demand for Coach.”
At Macy’s, they observed that “Coach had the least amount of traffic compared to [Michael Kors] or [Kate Spade].” While the heritage brand’s merchandise was marked down at rates similar to those of its two competitors, traffic was the highest at Kate Spade’s shop-in-shop — which had “the leanest markdowns of the three,” they noted.
And on Coach’s e-commerce front, the analysts observed an average price reduction of 47 percent.
On a visit to one of Coach’s outlets, Freedman and Matthews observed markdowns between 30 and 70 percent. Kate Spade’s nearby outlet offered merchandise at 60 percent off with an additional 20 percent off of handbags. Michael Kors was holding a weeklong promotion for 40 percent off of shoppers’ entire purchase. According to Freedman and Matthews, at the outlet center, “compared to Kate Spade and Michael Kors, traffic was moderately higher at Coach, but conversion remained low, in our view.”
“That said, we continue to believe traffic levels remain depressed, stemming from lower tourism and aggressive promotions at competitors,” they concluded.