COACH SAID TO BE UP FOR SALE
Byline: Wendy Hessen
NEW YORK — Coach, the $600 million leather goods powerhouse, is reportedly on the block.
Coach executives could not be reached for comment, but sources told WWD that an unnamed investment firm has begun circulating a prospectus to potential buyers.
Officials of Sara Lee, parent of Coach, declined to comment.
A sale of the Coach brand would come as no surprise in light of Sara Lee’s recent announcement of its plan to sell off some of its assets, especially those in the personal products division.
On Sept. 16, Sara Lee disclosed a sweeping three-year plan to “deverticalize” by divesting all of its 13 yarn and textile operations, some of its hosiery and intimate apparel operations and businesses with revenues of less than $1 billion.
At that time, Steve McMillan, president of Sara Lee, said there was a possibility that the Coach plant in Florida “could be sold, along with any plant around the world.”
In addition, Sara Lee chief financial officer Judy Sprieser told WWD that the sale of any operation in the personal care products division was possible, noting that the division has the lowest return of all Sara Lee’s businesses.
She also said the recent shutdown of luxury leather goods firm Mark Cross and the sale of Aris-Isotoner to Totes are all part of an ongoing initiative to either fix, close or sell businesses with a return on investment of less than 20 percent before taxes.
Coach, meanwhile, has been attempting to transform itself from a classic brand into one with a younger, more contemporary image.
Reed Krakoff was hired away from Tommy Hilfiger this year as Coach’s first creative director, overseeing product development, design and merchandising, store design and all creative services, including the Coach catalog.
Lew Frankfort, chairman and chief executive officer of Coach, acknowledged at the time that the changes were necessary. While the company has remained profitable, retail sales had begun to falter, and he described Coach customers as being “hungry for newness.”
Krakoff’s initial product introductions — most notably the Ergo collection — have been generally well received at department stores and the more than 120 Coach retail stores nationwide, but there have been reports that sales are still uneven.
The company also recently introduced its first new logo in 70 years and a new advertising campaign — at a cost of roughly $4 million — featuring a host of up-and-coming actors and models with their Coach bags. Besides the new creative aspect, the campaign has appeared in some unusual places for the brand, such as outdoor billboards, bus and subway ads, postcard racks and wild postings.