- Gross Margins are around 74%. Do you understand the gravity of that number? A handbag costs them $100, then they sell the handbag for $399. That's how you generate profit, folks!
- Only 11% of sales happen in Department Stores.
- "... and what we are seeing is a huge opportunity around segmentation and customization which will begin to effort against this holiday. So you will see us doing a more tailored approach around e-mail. In terms of open rates and e-mail response rates, we are disciplined there. We do not bombard people with a lot of e-mails if they choose not to engage, so we control that carefully. Our e-mail productivity is strong."
- "While e-mail can be an effective way to get a lot of messaging out there because it is virtually free from a cost standpoint, we are not going to use that irresponsibly. We are careful to not bombard consumers with email messaging that we believe to be intrusive. It is not an enormous piece of our overall online business, but it is an important messaging tactic for us. We are optimistic about engagement and open rates within Coach.com."
- New Coach retail stores average $2.0 to $2.1 million in net sales, annually.
- Jennifer Black asked if the customer still buys four or five handbags a year as she did a while back, and was told that the trends have not fundamentally changed. Wow! That's some handbag mojo, folks!
Kevin -- Coach is a manufacturer, for gosh sake, with a strong luxury brand. Are you blaming retailers for having to operate with inherently lower margins than manufacturers? -- AlanReplyDelete
Oh no, I'm not blaming anybody for anything.ReplyDelete
Only 11% of their sales are in department stores (like Macys or Nordstrom).
The other 89% happen in their own stores or on their website --- which means they are running a business model that is not fundamentally different than many specialty retailers ... with one exception ... their gross margins are enormous!
Now I'm not saying that somebody like Eddie Bauer needs to run margins in the 70% range. But it might need to be somewhat better, long-term, than in the upper 30s, for example.
Thanks for the good comment.
I'd wrap up my thought by saying that a ton of businesses manufacture their own product (Lands' End, L.L. Bean, a third of our merchandise at Nordstrom was private label merch that we manufactured).ReplyDelete
None of those businesses ran margins in the 70s, wow!