The second half of 2015 was rough for most luxury retailers and the new year isn’t bringing any extra cheer (read: Luxury Market Expects Weakest Year Since Lehman Crash). Stories continue to pile up indicating we’re well into a bear market for bags. According to analysts at Credit Suisse, premium department stores are upping their discounts on luxury bags to shed excess inventory from the holidays. This will put downward pressure on prices at least through the next quarter, all but guaranteeing another round of disappointing profit numbers.
But it isn’t just the big-time luxury players in trouble. Coach, the mid-level handbag and accessory giant, reported a disappointing 7% decline in the second quarter in both sales and overall profit. Discounts were a major cause of the decline. Coach braced the fall with a sales boost during boot season from recently acquired Stuart Weitzman, but it’s clear the handbag market is becoming prohibitively competitive at all price points.
Where will new demand in the industry come from? Which brands stand to benefit most in this ultra-competitive environment? Who might not survive?
- Remember we discussed the need for brands to embrace the accessories for your accessories (read: Bear, Bugs, and Karlito: Trinkets are NO laughing Matter).
- The cause and effect of internet brand fatigue (read: Internet Causes Brand Fatigue for Handbag Companies)
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Explore more related financial posts:
Internet Causes Brand Fatigue for Handbag Companies
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From Coach to Hermes: The Luxury Handbag Market
The Increasing Accessibility of High Fashion
Luxury Market Experiences Weakest Year Since Lehman Crash
Bear, Bugs, and Karlito: Trinkets are NO laughing Matter