Coach is in a catch-22.

It’s discount outlet stores are driving most of its customer traffic and sales, while the company is trying to emphasize its full-price stores and regain its place among luxury brands, offering fewer discounts.

“We estimate that four out of five handbags sold by Coach are coming out of the factory stores,” said Wells Fargo analyst Paul Lejuez.

The company’s third-quarter sales declines have analysts asking whether its two-year-old turnaround strategy, which includes a new management team, is working. Sales in the US were down 24 percent to $493 million; total sales were down 15.5 percent to $929.3 million, the Manhattan-based leather-goods purveyor reported on Monday.

The 74-year-old company has lost market share to brands like Michael Kors and Kate Spade.

Coach had 201 of its 478 stores in outlet shopping centers as of the end of March.

CEO Victor Luis, said he was pleased with the quarterly results and that the company is on track with the guidance its offered.