Dive Brief:
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Coach has leased space on Fifth Avenue in Manhattan for its Manhattan-based flagship store, according to details of a conference call hosted by the landlord of 685 Fifth Ave., General Growth Properties Inc., reported by Bloomberg Tuesday.
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The company, which includes the flagship luxury bag maker and its Stuart Weitzman footwear brand, will pay about $4,000 a square foot in rent for about 23,400 square feet, sources told Bloomberg.
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After damaging its brand with heavy discounts and perhaps too much attention to its outlet stores, according to analysts, Coach last week reported Q2 net sales increased 7% to $1.27 billion.
Dive Insight:
There may not be a better sign that Coach is back as a luxury brand and not a has-been than its plans for swanky Fifth Avenue digs.
Same-store sales fell just 4% in its last quarter, the smallest drop in more than two years. Fortune notes that while the company itself doesn’t break out outlet sales, they account for some 70% of the company’s sales, by some estimates.
The deal is a sign of confidence for the company, which has been widely viewed for months, if not years, as a failing brand that had lost its upscale reputation.
Coach appears to be rectifying that—and successfully so—in part by reducing the frequency and depth of its discounts, turning instead to less frequent promotional events that the company has found actually brings in new customers, according to Andre Cohen, president of Coach North America.
But it won’t be smooth sailing in Manhattan. In addition to the steep rent, the strong dollar has cut into sales from foreign tourists traveling to New York and other U.S. destinations. The dollar has already muscled into Tiffany’s holiday sales enough to prompt job cuts at the upscale jewelry retailer.