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Coach Sales Down, Prices Up

Sales for Coach Inc. in North America nose-dived in the first quarter of 2014 resulting in a 20 percent decline in profits for the handbag and accessories retailer.

Third quarter profit dropped to $190.7 million from $238.9 from the same period one year ago. Total sales fell to $1.1 billion, a 7.4% decline.

Coach also warned that their profit picture doesn’t look any brighter for the remainder of the year, with ongoing slippage expected. The firm demurred from forecasting when sales and profits are expected to start climbing again.

To counteract the significant drop in sales and profits and to upgrade its image among consumers, Coach will raise prices of its products, a tactic that may not necessarily make up for the declines. Some product discounts will also be eliminated. Consumer reaction to Coach’s reconfigured pricing structure has yet to be measured.

But investors reacted negatively with share prices for Coach (COH, NYSE) down more than 9 percent for the year at the end of trading on April 30.

Despite the gloomy news for the womens’ offerings, men’s and global sales for Coach jumped 44 percent to $44 million, a 20 percent spike, adjusted for fluctuating foreign currency prices in relation to the U.S. dollar.

The company’s longterm plans include moving beyond making handbags and accessories into a comprehensive lifestyle brand, adding clothing and shoes to its product mix. The transformation will take several years, according to the company’s CEO Victor Luis.

Meanwhile, Coach continues to open outlet stores in seeming conflict with its increased pricing tactics and new positioning strategy, industry analysts say.