Coach closing 250 department store locations

(Mike Mozart / CC BY 2.0)

Coach (NYSE:COH) is pulling product and closing shops within shops as the brand continues to refocus its efforts on owned locations and regaining status with luxury and aspirational shoppers.

CEO Victor Luis said the company is rationalizing its department store exposure and will close 250 locations, a 25 percent reduction of this format. The goal is to reduce the availability of discounted merchandise and markdown allowances.

"While we understand that consumers may use department stores for trial and shopping across brands, the high level of promotional impressions created negatively impact our long-term brand health, while generating confusion across channels," he said on a conference call.

Management is focused on elevating the brand and its status. Coach's cache has been hurt by years of discounted merchandise and heavy presence in outlet malls. The goal is to reposition it as a luxury brand.

The product lineup now consists of a combination of basics, new designs, and focus on classics that harken back to 1941 and the birth of the brand. Stores are now more representative of what the company calls "modern luxury."

Coach has renovated and opened roughly 300 modern luxury locations globally this year and will have more than 400 such formats by year-end. New flagships are slated to open by the holidays, including a new store on Manhattan's Fifth Ave.

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