Coach Shares Climb Ahead of Poppy Launch

In what could be called a fairly obvious maneuver during a once-in-a-generation recession,Coach(COH Quote) is lowering its prices. But what will it do when the economy rebounds?

This Friday, the aspirational retailer's new Poppy collection will officially launch, and is expected to boost store sales the moment it does, Lazard Capital Markets analyst Todd Slater said in a note on Monday.

With prices that start at $198, the line is intended to appeal to the somewhat oxymoronic "budget-conscious luxury consumer." The Poppy collection is part of Coach's plan to lower prices 10% to 15% over the next year. The company will offer about half of its handbags for $200 to $300.

Slater increased his price target to $32 from $30 as a result.

"While Poppy doesn't officially launch until Friday ... the collection has already generated a lot of media and customer buzz, thanks to smart marketing (bus ads, blogging, press interviews highlighting the Poppy strategy) and the fact that customers can pre-order the collection in stores and have it shipped free to their homes," Slater wrote.

This immediate response is giving analysts hope that the company can turn around its lackluster performance.

Shares in Coach have climbed in morning trading Monday, rising by 66 cents, or 2.5%, to $26.91.

In April, Coach said third-quarter profit fell 29%, while revenue edged down 1% to $739.9 million.