Coach Inc.: From Staid to Stylish

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Case Details:

Case Code: BSTR235
Case Length: 24 Pages
Period: 1941-2006
Organization: Coach Inc.
Pub Date: 2006
Teaching Note: Available
Countries: USA
Themes: Corporate Strategy and Differentiation
Industry: Textile, Apparel, and Accessories

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Introduction Contd...

By the time Sara Lee Corp. (Sara Lee)⁷ bought the company in 1985, Coach had become a premium leather accessories brand in the US. Under Sara Lee, Coach underwent a major expansion and entered the overseas market. However, by the early 1990s, Coach had lost some of its cachet, as other premium brands offered customers products that were 'hip and trendy'.

In contrast, Coach was mainly known for its classic and staid designs.

In the late 1990s, Coach underwent a transformation under the management of its then CEO, Lew Frankfort ⁸(Frankfort), who, along with the company's president and creative director, Reed Krakoff (Krakoff), undertook certain measures that helped the company revive its image in the market.

By the end of 2005, the company was in a strong financial position, and its revenues in 2005 were more than three time its revenues in 2000.

Background

Coach was established in 1941, as a small leather goods manufacturing unit operated by Miles Cahn (Cahn) and six leather artisans, in a loft in Manhattan, New York. The unit produced high quality leather handbags, and was run as a family business by the Cahn family.

Over a period of time, Cahn brought in some significant improvements to the leather manufacturing process at the company. He developed a new method of leather processing, which made the leather strong, yet soft and flexible, and gave it the ability to absorb dye well, allowing it to acquire a deep color tone.

(He developed this new way of treating leather to improve its quality after he observed how the leather of baseball gloves became soft and supple over a period of time as a result of abrasion and wear.) After adopting the new processing technology, Cahn began producing women's handbags made out of thick cow skins.

This was an innovative idea as, at that time, handbags were usually made out of thin leather pasted on cardboard. Cahn sold the cowhide handbags under the Coach brand name. Gradually, the Coach brand became popular in the US and the company became well known as a maker of high-quality leather handbags. Over time, Coach came to be recognized as a premium brand that offered superior quality leather goods in classic styles...

Excerpts >>

7] Founded in 1939, Sara Lee was a consumer goods company based in Illinois, USA. As of 2006, its main businesses included food and beverages, branded apparel, and foodservice. For fiscal 2006, Sara Lee's revenue amounted to $15.9 billion.

8] Frankfort joined Coach in 1979 as vice president of business development. He became the president of the company in 1985, when Sara Lee purchased Coach from Miles Cahn, the owner of Coach at that time. Frankfort was named the CEO of Coach in 1996.