* Frankfort to stay on as executive chairman after stepping
* Luis to be chief commercial officer until becoming CEO
* Shares down nearly 1 percent
By Phil Wahba
Feb 14 Longtime Coach Inc Chief
Executive Officer Lew Frankfort will step down in January and be
replaced by the executive who has overseen the upscale
leather-goods maker's successful expansion in Asia, the company
said on Thursday.
Frankfort, who joined Coach in 1979 as vice president of new
business development and built it into one of the biggest names
in high-end yet affordable handbags, will stay on indefinitely
as executive chairman after his successor, Victor Luis, takes
the reins next year.
Luis, 46, was named chief commercial officer until then and
will head all business units, merchandising, licensing and
strategy, in part to deepen his understanding of Coach's
business in North America, where sales have cooled.
Coach said the appointment was the result of a multiyear
succession process in which it considered both internal and
external candidates. Frankfort's contract was set to expire in
July after an extension four years ago.
"This is going to be a seamless transition," Frankfort, 66,
told Reuters. "We are aligned on business direction and
Frankfort, known for his Bronx accent, is credited with
transforming Coach from a tiny niche player into a major leather
accessories brand. Wall Street analysts expect the 72-year-old
company to report sales of $5.1 billion for the fiscal year
ending in June. In 1979, sales were $6 million.
But more recently, Coach has hit some speed bumps. During
the holiday quarter, comparable-store sales fell in North
America as the company faced growing competition from Michael
Kors Holdings and Fifth & Pacific Cos Inc's
kate spade, among others.
At Wednesday's close, Coach shares were down about 40
percent from a high last March on fears that the company's days
of fast growth are over. On Thursday morning, they fell 0.8
percent to $48.36.
Luis' success in building up Coach's business in China, the
world's fastest-growing market for luxury goods, was a key
reason he got the CEO job.
Luis joined Coach in 2006 as head of its unit in Japan, its
second-largest market after North America. Two years later, he
took on the company's expansion in China, where sales rose 40
percent last quarter.
"The company and the board figured that the future is Asia,"
Morningstar analyst Paul Swinand said.
Still, Luis does have management experience in Coach's home
market. Before Coach, he ran the North American business of
French luxury brand Baccarat and earlier held marketing and
sales jobs at French luxury group LVMH.
When Coach reported results that disappointed Wall Street in
late January, it also announced plans to become a "head-to-toe"
lifestyle brand by significantly increasing its offering of
shoes and clothing and updating the look of its stores.
Luis said no one should expect his appointment to signal a
radical change in Coach's strategy.
"This is not a revolution in terms of management at Coach,"
he told Reuters. "It is a smooth succession."