Coach's Expansion Plans for China, Europe, and Men's are in the Bag

Last Updated May 10, 2010 5:32 PM EDT

Coach flagship storeCoach (COH) sailed through the recession on a diversification strategy that offered cash-strapped consumers a way to snag a bit of luxury without breaking the bank. Now the company's setting its sights on European and Asian expansion as well as an upscale men's-only shop in Manhattan. The timing couldn't be better.

Coach is riding on sales of $831 million for its third fiscal quarter (ending in March 2010) which reflects an increase of 12 percent.That's partly due to the success of its Poppy line of purses designed with an eye toward captivating a younger, more price-conscious stylista. Poppy carries the weighty image of the classic brand, but bold graphics and bright colors appeal to the eye while sticker shock remains a minimum with prices starting around 30 percent below Coach's regular retail.

Striking while the revenue iron was hot, Coach is pushing further into China with a plan to add nearly 50 more stores. Though no doubt buoyed by the fact that sales are now at least a year ahead of schedule (on track to do $250 million in sales in fiscal 2012) Coach is not taking any chances. The company is also investing in intensive market research to determine the right product mix for the Chinese market including which materials, sizes, styles and functions buyers prefer.

The company's making a re-entry into the European market with a somewhat more conservative approach. Partnering with Printemps in France and British retailer Hackett Ltd. for Spain, Portugal, Ireland and the U.K., Coach products will be sold in shops-within-shops concepts. It's a win-win as the department stores get the goods while Coach tests products without investing in stand-alone real estate.

That said, stateside, Coach is fearlessly opening a small store just for men. A tiny boutique on Bleeker Street in lower Manhattan that will feature small leather goods and travel accessories as well as footwear, jewelry and swimsuits. Though the men's side of the business is small in comparison to its women's collections, Coach's management sees this as a proving ground for developing and growing the market which -- judging by the likes of J. Crew's (JCG) foray into premium jeans and other upscale threads -- is ripe for the picking.

Image of Coach store via