Krakoff has carried Coach to a highly profitable realm


Before there was flushed-faced longing for Balenciaga shoulder bags and status in carrying a Chloe Paddington, before Miuccia Prada transformed a nylon backpack into a symbol of wealth or the Fendi baguette became a plot point on "Sex and the City," there were Coach handbags.

Understated, sturdy and utterly lacking in sex appeal, Coach bags are known for being indestructible. Even today, longtime fans tell of decades-old bags that are still in use. A 10-year-old briefcase still accompanies one Detroit entrepreneur to the office. Another handbag survived the violent tugging of a mugger in Washington.

Until recently, Coach's most glamorous moment came in 1980 when the bags were cited in "The Official Preppy Handbook" &

and throngs of preppy wannabes started carrying Duffle Sacsand popping the collars on their Lacoste shirts.

But in the past 10 years, Coach has become one of the fashion industry's most dynamic success stories. While new designer names such as Proenza Schouler and Zac Posen paint glamorous fantasies, Coach occupies a highly profitable reality.

With the arrival of its first creative director, Reed Krakoff, in January 1997, Coach began to transform itself from a $500 million manufacturer of reliable and tasteful purses into a $2.6 billion company that has its name on shoes, furniture, luggage, outerwear and, most important, bags. They represent 56 percent of the company's business.

The typical consumer would be forgiven for assuming that handbags are mere flourishes in the fashion economy. But that hasn't been the case for a long time. Accessories appeal to the broadest range of consumers and offer the widest profit margins. It's the hobo bags that rake in the big bucks, not the boho skirts.

The company, founded in 1941, has experienced double-digit growth over the last 10 years. Much of that growth has been due to Krakoff's ability to translate imprecise notions about American style, classic silhouettes and a modern sensibility into products, transforming Coach from a utilitarian purchase into a fashion one.

"Brands are like people," Krakoff said. "They have tendencies, things they will do and things they can't do."

Like a lot of his customers, Krakoff, 43, grew up in Connecticut at a time when Coach epitomized East Coast preppy style. He had been steeped in the marketing of Americana after spending more than a dozen years working for designers Ralph Lauren and Tommy Hilfiger.

In price, the company's handbags are situated between the fancy designer bags that typically start at about $1,000 and the mass market handbags, from companies such as Nine West, that top out at $100 or so. The average sale in a Coach store is $325. Depending on one's income and point of view, Coach manages to be both a luxury and a bargain.

This summer, New York's ready-to-wear designers prepared their spring 2008 collections for the runway shows that began Wednesday. If they are lucky, the clothes will appeal to that tiny percentage of customers who have made peace with spending $800 or more on a day dress. Krakoff spent his summer focused on the needs of everyone else.

On a sticky June afternoon, in an over-air-conditioned loft in Chelsea Piers, Krakoff is alternately scrutinizing Polaroid pictures and hunched over a large-format camera. He is photographing the company's holiday advertising campaign &

dubbed "Bleecker," after the Manhattan street where the company is opening one of two boutiques that will be focused on fashion bags and limited-edition ones.

When Krakoff first came to Coach, he hired pedigreed fashion photographers for this kind of work. But since he began studying photography about two years ago at Parsons, where he also received a degree in fashion design, Krakoff has been doing it himself. From reinterpreting and modernizing an established brand's sensibility to directing the advertising campaign, Krakoff is a middle-market version of Chanel's Karl Lagerfeld.

The company's ads have livened up significantly from the early days when they celebrated American cultural history with sober shots of famous scions &

Gary Cooper's daughter, a descendant of Mark Twain &

with their favorite Coach products.

Now Krakoff is standing in front of four long-limbed young models draped in Coach handbags, hats and scarves. They are heavily styled with white tights and wedge heels, cellophane corsages and picture hats adorned with giant protruding feathers. Nothing about the image suggests utilitarian. It screams fashion.

For the current shoot, Krakoff is choosing from a sprawling selection of products atop a maze of tables: handbags, scarves, hats, shoes, gloves and charms. Coach helped popularize the idea of accessorizing one's accessories with charms ranging in price from $28 to $38. (An impulse purchase for some shoppers; an indulgent introduction to the Coach brand for others.)

Some fashion snobs deride Coach, unable to deal with the idea that a handbag so readily accessible, so vaguely democratic, could also be so desirable. They dismiss it as a starter bag &

and an ugly bag. The Web site, which offers critical assessments of new handbags, showed no mercy in critiquing Coach's patchwork bags. "I know I sound like a total snob when I say that I cringe when I have to walk by a Coach store. ... The other day ... I inadvertently stopped in front of a Coach store. I looked up and was assaulted by a wall to wall display of their hideous patchwork bags! I almost passed out and wanted to run but could not tear my eyes away from these deformed-looking bags!"

Of that review, Krakoff responds: "I'm OK with that. We can't please everybody. We're here to please the customer."

Kibibi Springs, 34, of Los Angeles, remembers her first Coach bag: a black suede Duffle Sac purchased in 1995. She still uses it. "They should keep up the good work. I think they have a great brand," she said.

"When I think of Coach, I think it's classic but also on trend without being trendy," said Springs, who works in marketing for the entertainment industry. She shops across the spectrum from high-end designers to mass merchants. She said Coach gets the seasonal colors right, the patterns. But the lines are classic. "It's not a toss-away item."

Coach customers like patchwork. They like charms. And they like the Coach logo-print fabric with its pattern of stylized C's, although Krakoff said it isn't a logo at all, which is a bit like having someone say that it's not raining even as you're standing outside getting drenched.

"One of the things we've done with the logo is reinterpreted it with patterns in abstraction," he said. "It's just become a material."

In Krakoff's office, which is not on Seventh Avenue but on far West 34th Street, a black Louise Nevelson labyrinthine sculpture covers one wall. He owns various works of important art, as well as a Manhattan townhouse and a summer home in the Hamptons.

Krakoff, who is married and has four children, has a dry wit and is given to the kind of emotionless analysis of the fashion business that one might find in a loan officer. Perhaps that comes from having degrees in both economics and fine arts from Tufts.

He sniffs with skepticism at labels, particularly European ones, that put a price tag of almost $2,000 on a handbag. "Knowing what it costs to make a bag &

" he begins. And then pauses. Disgusted. Some of the cost is based on status, some of it is because of small-scale production. "But we use the same raw materials," he said. He firmly believes that Coach is a luxury brand.

"Luxury is personal," he said. "It's old-fashioned to think that it has to be made a certain way." Or in a certain country. Or by unionized labor.

Luxury is not related to hand-sewing, he said, or a label that said "Made in Italy." "Truthfully, I look at a lot of bags, and it's not where it's made but who makes it. I think the European brands have been pushing that because it's the only way to justify $9,000 for a bag."

Coach's manufacturing used to be centered in New York. The prototypes are still made here, but the production now takes place all over the world.

Like most designers, Krakoff trusts his gut instincts. But he does not give in fully to the idea that a designer must tell consumers what they want to buy next. Coach conducts market research. It organizes focus groups.

The major drawback to focus groups, Krakoff said, has to do with the momentum of a group. "If someone in the group said, 'I don't like it,' there tends to be a gang mentality. ... It's not a science. The research helps us understand better how things are going to do. The trick is not to be too literal."

Sometimes, the best research, Krakoff said, is "if I walk into a room with a bag and no one said anything. It probably isn't a good bag."

Walking into a Coach store provides an immediate sense of the diversity of the customers. There are professional women looking for work bags, teen-agers buying tiny hobo styles and indulgent shoppers choosing a $398 tote for a gym bag.

"They always have pretty colors for the spring season," said Celeste Schreier, a 15-year-old Coach fan in Michigan who favors shades of pink and has a stash of Coach bags in her closet, including a white one with multicolored C's from her bat mitzvah. "I like having a bunch so I have different options."

How many bags can people buy?

In fiscal 2007, Coach net sales were up by 28 percent over the previous year. The company expects sales in 2008 to top $3 billion.

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