The great bag sag continues.
Michael Kors Holdings and Coach both reported negative same-store sales this week — down 9.5 percent and 19 percent, respectively, in North America.
And Kate Spade, while still posting impressive sales growth of 12 percent in the second quarter, was essentially flat compared with the first quarter.
“The concern is that growth in the handbag category is slowing and that’s a broader trend,” said Maxim Group analyst Rick Snyder. “I don’t see any new or exciting designs,” which has led to consumer fatigue.
The chief executives of Coach and Michael Kors both described the handbag market in North America as growing in the low- to mid-single digits. They blamed the strength of the dollar and fluctuations in tourism — not flaws in their designs.
“The handbag business continues to be robust, though not at the same levels it grew [in the past],” Kors CEO John Idol said during a call with analysts.
That the bottom hasn’t dropped out of Kors’ handbag business cheered investors, who pushed the stock up nearly 11 percent, to close at $43.77 on Thursday.
“The company-specific data didn’t suggest that the handbag market is accelerating, but it is stabilizing,” said Nomura analyst Simeon Siegel.
That’s small comfort for companies that have staked their reputations on bags and are now trying to transform into lifestyle businesses, selling everything from home products to menswear to stay ahead.
Coach, for example, is the official luxury brand of the New York Yankees “to drive brand awareness among male consumers” to its menswear merchandise, CEO Victor Luis said during an earnings call. Michael Kors has a large watch collection, while Kate Spade has expanded into a kids line and home decor.