For years, Tapestry, owner of big mainstream fashion labels like Kate Spade, Coach and Stuart Weitzman, has been making a concerted effort to move away from deep discounts. But coronavirus has forced many fashion brands into less-than-desirable strategies, and each of Tapestry’s brands is now showing heavy discounts on their e-commerce site — up to 75% off on Kate Spade and 30% off at Coach.
In the second half of 2019, Tapestry brands reduced discounting in an attempt to move the company’s portfolio upmarket, according to data from Thinknum. That included instituting a 10% reduction in promotions, which has continued into 2020, and eschewing selling to outlets.
The recent shift back to discounting is part of what chairman and CEO Jide Zeitlin called a focused effort to “preserve liquidity and [enhance] financial flexibility,” in a press release covering the company’s first quarter earnings on Thursday. Those earnings showed heavy losses, including a more than $670 million loss on the bottom line in the first quarter.
But heavy discounting, while not a good sign for an upmarket brand’s health, is not the end of the world.
“Brands are currently trying to stay afloat during this pandemic,” said Avery Faigen, retail analyst at Edited. “Discounting, which might not have originally been a strategy for some brands, may be the way they get through this trying time. And that does not necessarily mean a tarnished brand value in the long run.”
Coach was one of the first brands to join Luxury Soho, Chinese e-commerce giant Alibaba’s off-price counterpart to its popular Luxury Pavilion option. Luxury Soho works on a similar principle as Luxury Pavilion, allowing brands to set up their own online stores within Tmall’s larger ecosystem. However, it’s targeted toward brands looking to liquidate inventory at massively reduced prices and with little fanfare.
The service was quietly launched on Apr. 20 and Coach joined on Apr. 25. Not coincidentally, Coach was also the hardest hit of Tapestry’s brands this quarter, losing nearly $200 million.
While Tapestry did not respond to requests for comment on this story and did not address promotions or off-price retail in any earnings statements, Zietlin did mention promotions in an internal email to staff in mid-March, saying that the company is “exploring creative ways (digital and in stores) to meet demand and keep our customers engaged and abreast of product launches and promotions.”