Updated from 6:30 a.m. EDT to include note from Morgan Stanley and updated stock price.
Coach (COH) continues to shout its new message to women from the rooftops: It's an authentic American brand around since 1941 that can dabble in being a fashion trendsetter.
On Tuesday evening during Fashion Week in New York City, the handbag and accessories maker unveiled its spring 2017 women's line amid a set full of junked vintage American cars by Dodge and Chevrolet (below). The entire collection, which will influence what Coach sells to more mainstream customers next year, could be summed up as: Imagine a die-hard male for all things American made married a girl with an obsession for the 1970s. In their spare time, these 30-somethings who lived through the over-the top clothing styles of the 1990s designed apparel and accessories.
Coach models walked down the runway donning platform shoes with studs (1970s meets 1990s), long flowery dresses (1970s and early 1990s), chokers (so 1990s) and embroidered leather jackets (Harley-Davidson's classic look). The company's handbags took a backseat to the in your face apparel and accessories, but small suede and leather offerings still shined for their aggressive styling and quality look.
Vintage American-made cars serve as inspiration to Coach's spring 2017 women's runway show.
The focus on all things Americana shouldn't be a shocker to anyone who has closely tracked Coach's product and marketing reboot over the past year. "Our transformation that we refer to as modern luxury is really about transforming the brand much more into a lifestyle brand that has fashion credibility and that is very much grounded in the history, heritage and quality of Coach being America's original house of leather," explained Coach CEO Victor Luis in an interview with TheStreet in May.
Luis, who took over as Coach's CEO in 2014 after leading the brand's successful expansion in Asia, added, "This is such a unique positioning for any American brand. There isn't a 75-year-old leather brand in the U.S. today that is also a credible fashion resource."
Coach has used fashion week to plant a flag in the ground that it's in fact the credible fashion resource Luis believes. In addition to the showing of the spring 2017 line, last week Coach opened to a two-level pop-up store in Tribeca to show off its "Varsity" collection.
Inspired by whimsical images from the simpler times of high school, the Varsity products include limited-edition handbags featuring large ironed on fabric dinosaurs, leather jackets with silver studs, and bright gold boots. Typical high school kids probably couldn't afford the stuff, however. A Coach associate on hand told TheStreet the collection is priced between $1,500 to as much as $3,000.
At least one Wall Street analyst isn't buying into Coach's turnaround, however. "Our definition of a turnaround is sales growth with stable profit margins or stable sales with margin improvement. However, Coach has not proven it can deliver either of these," Morgan Stanley analyst Kimberly Greenberger explained in a note Wednesday where she downgraded her rating on Coach to underweight, or the equivalent of sell.
Greenberger cited continued high promotional activity at Coach's outlet stores and unrealistic expectations on Wall Street for a prolonged sales rebound at full-price Coach locations as key factors in her downgrade.
Shares of Coach fell 2.6% in recent premarket trading on Wednesday.
We share the top trends Coach displayed on Tuesday that will trickle down into what consumers will see come next spring.
