Coach to bag China sales growth by expanding
United States luxury retailer Coach aims to ramp up sales on the mainland by steadily expanding its stores and other distribution channels in lower-tier cities.
Lew Frankfort, chairman and chief executive, said the New York-based firm was on track to secure at least US$300 million in sales across the mainland, Hong Kong, Taiwan and Macau in its fiscal year to June.
Sales surged 60 per cent in the quarter to March from the same period last year.
'China is our largest geographic opportunity given the size of the market and the rate of growth,' Frankfort said. 'We added five new locations [last quarter], all on the mainland.'
Coach now has 85 stores in China - 12 in Hong Kong, three in Macau and 70 on the mainland. Ten more stores are slated to be open in the quarter to June.
The first US-incorporated company to list on Hong Kong's stock exchange last year, Coach posted a 16 per cent increase in global net earnings for the nine months to March to US$787 million, from US$678 million in the same period of its last fiscal year. The firm attributed the better performance to the growth of its channel distribution.
Victor Luis, president of Coach Retail International, said the sales increase in China had been driven by the opening of new stores, which have been performing better than expected.
'We're now at 32 cities across China, which is still a very small portion of the 120 or so cities that have a population of 1 million or more,' Luis said.
'All but one of the locations that we will open this [fiscal fourth] quarter would be in tier two and tier three cities. Longer term ... the vast majority of tier two and tier three cities will be the drivers [of growth].'
The multi-channel distribution strategy that Coach was implementing in China involves the opening of flagship stores, retail stores within shopping malls, department stores and factory outlets, Luis said.
'Factory outlet malls will undoubtedly be a massive opportunity [in the] long term within the China market,' he said.
