Luxury handbag retailer Coach’s strategy to eschew discounting is undercut by the prevalence of its own outlet stores, according to reporting by the New York Post.
An estimated four out of five handbags sold by the company are from outlet stores, which are 201 of its 478 stores, Wells Fargo analyst Paul Lejuez told the Post.
The retailer this week reported a 15.5% decrease in quarterly revenue, dragged down by sales in North America, which fell for the seventh straight quarter.
Coach was once a victim of sales of knockoffs sold on the street, but now it seems the brand is suffering from its own undermining of the luxury category where it’s fighting to compete.
Columbia Business School marketing professor Mark Cohen has warned that outlet stores can be a slippery slope for a retail brand. “Expansion of these outlet strategies is very, very dangerous," he told Buzzfeed last year. "At what point does your outlet business become too visible to your regular business?”