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J.C. Penney is not the only retailer suffering from a lack of coupons.Luxury handbag giant Coach plans to reinstate coupons at its Factory outlets, after same-store sales decelerated, J.P. Morgan analyst Brian Tunick says.
“It appears management has moved back to coupons and emails in late June after several months of testing the new strategy in the prior quarter,” Tunick says.
The company eliminated coupons at its more than 162 North American factory stores at the start of 2012 as it introduced Every Day Low Pricing in an attempt to boost margins.
“Our new ‘no maths’ pricing structure provides us with greater marketing flexibility, enabling us to balance productivity gains and margin improvement,” Coach’s Chief Executive Lew Frankfort said at the time.
But customer acceptance of the lower pricing strategy did not seem to gain momentum, forcing Coach to change its stance.
Tunick says management’s decision to reverse course so rapidly could end up boosting results in the following quarter.
“While we believe that there was a slowdown at the factory outlets this quarter that stemmed from the lack of couponing … we’d point out that the re-implementation of coupons could potentially act as a comp driver going forward,” Tunick says.
Ahead of the company’s fourth quarter earnings next week, analysts expect Coach to report earnings per share of $0.85 on sales of $1.2 billion, representing 25 per cent earnings growth.
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