Handbag seller wins by adjusting to consumer mood

When the economy was strong, the leather goods, handbag and accessories company was the shopaholic’s best friend. It churned out lines of pricey handbags — some embellished with fur — and other baubles to aspirational fashionistas. Money was often no object and Coach was sitting pretty. When the recession hit, Coach changed course. Slightly. It kept its upscale breeding, but tweaked its merchandise and marketing, offering lower-priced products without degrading its brand by resorting to jarring markdowns. To be sure, these were still luxury items, but the pricing was more in line with the prevailing economic mood. Coach’s earnings report released Tuesday showed that it is still resonating with shoppers. Profit rose 34% and sales jumped 20%. Read more Coach coverage. “We have responded to a muted consumer environment globally with our merchandising, marketing and pricing strategies and are experiencing strong top and bottom line results,” Coach Chief Executive Lew Frankfort said in the earnings report. In terms of the crucial holiday season and end of the year, Coach said early reaction to holiday merchandise has been strong and it’s “well positioned” and remains “confident” in its growth prospects and ability to drive sales and earnings at a double-digit pace. On its conference call with analysts, it specifically mentioned it was “excited about the trend in small bags,” which it will promote as easy, affordable gifts. Executives also feel good about its beefed-up men’s line.