Coach risks profitability with diversification into other product categories

In a defensive move as upstarts such as Michael Kors and Tory Burch challenge its dominance of that market, New York-based accessories brand Coach is aiming to become a full lifestyle brand offering consumers a total look. On Coach’s choice to start with shoes, analysts say the whole idea could put the company’s legendary profitability at risk.

In recent years, Michael Kors, Ralph Lauren Corp., Tory Burch, and Kate Spade brand moved more aggressively into Coach’s territory, chasing handbags’ lucrative margins. Coach for the first time lost North American handbag market share in the quarter ended in December.

Coach has offered some shoes before, such as $98 casual “C” logo sneakers. Its new line, introduced in more than 170 North American stores in March, is larger, more fashionable and higher-priced, with styles including “Nala” faux python pumps for $248 and “Dalia” ballet flats at $138. The company has installed shoe salons in some flagship locations and made shoes the feature of its windows in more than 75 locations.

The shoes will be added globally in the second half of this year, and Coach also plans to work on boosting sales at the department stores that carry its wares. The retailer will consider developing men’s shoes in the quarters ahead and may add footwear to its factory outlets, executives have said.

adapted from Bloomberg

Coach shoes in-store retail concept