Coach Inc. Chief Executive Officer Victor Luis has a strategy to make the brand more edgy and cool: a cheeky Mickey Mouse sticking out his tongue.
Facing an industrywide slump, Coach is slapping the Walt Disney Co. character on its leather goods, part of a plan to enliven the brand with pop-culture icons and create more limited-edition products. The idea is to give shoppers another reason to buy a new handbag -- and coax them into paying full price for it.
Since the worldwide launch of the Disney handbags on June 17, several of the items have sold out online, including all four colors of the $395 kisslock handbags that are designed in the shape of Mickey’s ears. Large $1,500 leather Mickey Mouse dolls and bean bags also have sold quickly.
“We’ve been very pleased with any time that we’ve engaged with fashion that’s been in a much more limited, emotional, inspirational way,” Luis, 49, said in an interview. “You can certainly look forward to us having other collaborations go forward.”
Coach is trying to restore its cachet after mounting competition, sluggish demand and heavy discounting led to two years of declining sales. The New York-based company has released fresh products and designs from Creative Director Stuart Vevers, aiming to win back customers from Kate Spade & Co. and Michael Kors Holdings Ltd.
Coach’s earnings growth rebounded last quarter, and Luis is cutting costs as part of his turnaround effort. The stock has gained 22 percent this year, outpacing the 1.5 percent gain of the Standard & Poor’s 500 Index. The shares were little changed in New York on Thursday, trading at $39.85.
Selling limited-edition items, such as the Disney products, helps ensure that they don’t end up in the discount bin, said Michael Binetti, an analyst at UBS Group AG. They have more “scarcity value,” he said. And the strategy is a better way to increase traffic than just offering coupons and promotions, Binetti said.
New York Attitude
Coach also is counting on American pop culture to make its brand more enticing to overseas buyers and foreign tourists, Luis said. The company is celebrating its 75th anniversary this year and aims to play up its New York heritage with a new flagship store on Fifth Avenue.