After pulling off a comeback in the US, Coach is turning to China

China bound.
China bound.
Image: AP Photo/Frank Franklin II
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Just a couple of years ago, Coach finally got back on its feet in the US, its core market, after a prolonged slump that saw the brand’s handbags filling sales racks at department stores. Today, it’s in a very different position.

American customers are spending happily on its leather goods again, shopping at full price and even reaching for more expensive bags. The brand continues to put out successful runway collections, and is debuting a new line with Selena Gomez.

Now Coach is getting more ambitious overseas, in China especially. In the next year, it’s planning an “unprecedented” amount of investment and attention on China, CEO and brand president Joshua Schulman said on a call with investors today (Aug. 14). It made clear that, outside the US, there is no more important market to Coach.

The main focus in the year ahead will be building the brand image among Chinese shoppers, many of whom already find its foreign pedigree and accessible pricing attractive. To boost that presence further, Coach will hold its first-ever fashion show in Shanghai, in December. It’s also increasing its work with local influencers—a popular strategy among luxury labels—and it has cast two Chinese celebrities in its fall campaign: actor and singer Timmy Xu, who appeared in Coach’s spring campaign as well, and actress Guan Xiaotong. (When K-Pop star Luhan announced he and Guan were dating on the Chinese social network Weibo last year, the traffic spike caused service outages.)

Coach’s business in China is already strong. It was among the earliest American luxury brands to start building a Chinese presence, and it’s been rewarded for it. When the company bought back its Greater China retail business from a distributor in 2008, its China sales were around $50 million. Now they’re north of $600 million, said Victor Luis CEO of Tapestry Inc., parent company of Coach, Kate Spade, and Stuart Weitzman, on the earnings call.

Luis believes there’s plenty of room to grow, too, and made clear just how important China is to the long-term plans of all Tapestry’s brands, not just Coach. “Outside of North America, that is the single largest untapped opportunity for all of our businesses,” he said.

Tapestry has a solid base to work from. In the recent quarter, Coach’s “outperformance” in North America—and even more so the included contribution of Kate Spade, which Tapestry acquired last year—helped lift companywide sales by 31%. (Sales at Coach specifically increased 5%.) Tapestry still has work to do to integrate Kate Spade and Stuart Weitzman fully, but its not easing up on its ambition to be a major player in global luxury.