In battle of the bags, Kate Spade wins -- for now
Luxury handbags seem to be as common these days as smartphones, and therein lies the problem for rival brands Coach, Michael Kors and Kate Spade, who all reported quarterly results this week.
As these three luxury heavyweights battle it out against brand saturation and bored shoppers midway through the year, it seems as though only Kate Spade has all the right moves.
Talking specifically about quarterly same store sales, only Kate Spade saw an increase in its latest financial quarter. The retailer says same store sales rose 10 % in its second quarter ended July 4. Analysts on average had expected an 8.3% rise.
Coach, on the other hand, saw sales at its existing retail stores in North America decline a whopping 19% for the fourth quarter ended June 27. Internationally, sales at existing stores fell 5%. Overall, Coach sales fell 12% to $1 billion.
Michael Kors, which has also struggled in previous quarters, isn't doing much better. The company reported a 9.5% decline in same store sales for the first quarter ended June 27, marking the sixth consecutive quarter of deceleration. In the fourth quarter of 2015, same-store sales dropped 5.8%, marking a spectacular fall from the 26.2% growth reported for the fourth quarter of 2014.
It remains to be seen whether any of these brands can keep the attention of their target markets for much longer, but Kate Spade may have the right strategy.
Kate Spade, unlike Michael Kors and Coach, has avoided over-distributing its products, which has helped it stay largely insulated from a general slowdown in the luxury handbag market.Analysts say Kate Spade has been maintaining tighter inventories and refreshing styles faster, preventing "brand fatigue" among customers.
Coach has been busy acquiring Stuart Weitzman and branching out into creating fashion lines, which may further dilute the clout of its brand.
Michael Kors has remained focused on its brand identity as a "luxury handbag purveyor," but the bags are now pretty much everywhere and many consumers don't want to buy the bag that everyone else has.
While Kate Spade keeps doing all the right things to keep consumers engaged, the battle of the bags rages on.