Will Coach Become Too Popular?

The stylish handbag maker had a blowout quarter. But rapid expansion may jeopardize its upscale image

Coach (COH), the maker and retailer of stylish handbags, just had a blowout season. For its fiscal second quarter, sales at stores open at least a year soared a whopping 25.7%, leading to a 31% increase in profit. Coach Chief Executive Lew Frankfort was so keyed up by these results that he boosted the number of stores the company will open this year by an additional 10, to a total of 40. "The Coach brand has never been more vibrant," says Frankfort.

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