QUOTE AND NEWS
SeekingAlpha  4 hrs ago  Comment 
By Value Record: [This post appeared originally on my blog: ValueRecord ] My investment in Coach (NYSE:COH) is off to a rocky start. It feels like it was an investment somewhat hastily made, but it is not clear if that is just my...
SeekingAlpha  7 hrs ago  Comment 
By Lester Goh: Poor operating performance (click to enlarge) Source: Google Finance In the past year, Coach (NYSE:COH) has not done so well for itself. As seen above, the company has fallen 34% since the year began. Reasons for this...
Benzinga  Sep 17  Comment 
In a note dated September 15, Canaccord analyst Laura Champine maintained a "cautious" Hold rating on Coach Inc (NYSE: COH), citing a best in class dividend yield and appeal to private equity. Champine noted the $27 price target suggested by...
SeekingAlpha  Sep 16  Comment 
By George Hanley: Shareholders in luxury goods maker Coach (NYSE: COH) haven't had much to cheer about in 2014, as the company's stock price has been losing altitude, down more than 30%. Coach has been hurt by a lack of sales momentum, especially...
MarketWatch  Sep 16  Comment 
Canaccord analysts said Tuesday they are sticking with a hold rating on Coach Inc. shares, citing its attractive dividend yield -- of 3.7% --- and the company's appeal to private-equity funds. In a note to investors, the analysts wrote that a...
Benzinga  Sep 13  Comment 
Speaking on CNBC's Fast Money, Tim Seymour said that many people see Target (NYSE: TGT) as a broken stock, but he wants to own it. Seymour explained that the company reported earnings and gave a very conservative guidance. Its Canadian business is...
TheStreet.com  Sep 10  Comment 
NEW YORK (TheStreet) --aCoach shares are up 1.2% to $37.09 in pre-market trading on Wednesday after analysts at Atlantic Equities upgraded it to "overweight" from "neutral," while raising its price target to $47 from $40. The firm has seen...
Benzinga  Sep 10  Comment 
Analysts at Atlantic Equities upgraded Coach (NYSE: COH) from Neutral to Overweight. The target price for Coach has been raised from $40 to $47. Coach shares have dropped 32.34% over the past 52 weeks, while the S&P 500 index has gained...
Benzinga  Sep 10  Comment 
TheStreet.com  Sep 9  Comment 
This story was updated from 8:46 am EST with additional information and analyst commentary. NEW YORK (TheStreet) -- Analysts at Goldman Sachs areiterated Coach aas a "sell" this morning, saying, "We believe Coach's high-fashion focused...
newratings.com  Sep 9  Comment 
WASHINGTON (dpa-AFX) - Handbags and accessories retailer Coach, Inc. (COH) Tuesday said it has appointed Gebhard Rainer as its President and Chief Operating Officer, effective September 29. The position was vacant since September 2013. Rainer...




 

Coach Inc. (NYSE: COH) is a leading retailer of premium handbags and accessories, located primarily in North America and has recently expanded into Asian markets. Basing its image on "affordable luxury," Coach seeks to establish a premium brand that caters to affluent consumers but also provides lower-priced goods to appeal to the demand of middle-class customers.

Due to its effective merchandising and brand-building, Coach has boasted high operating margins and increasing popularity within the U.S. and Japan for years, even in the suffering American economy. COH also intends to take advantage of increasing luxury consumption in China by taking more control of its retail operations there and building its own stores instead of relying on third-party retailers. As COH continues to develop its ultra-luxury collections, it will share in the recent increase in spending in luxury good markets as the affluent release pent-up spending power from the last year. [1]

Business Overview

Coach is a leading American manufacturer and retailer of leather goods, accessories and apparel for men and women. Coach occupies the affordable luxury segment, which provides high-end merchandise for both high and middle-income consumers. For example, prices for a Coach handbag can range from $298 to $6,000.[2]


Business Segments

Coach is divided into three main revenue segments:

  • Handbags (63% of net sales): There are usually 3 - 4 collections per quarter and 4 - 7 styles per collection. These collections feature classic and fashion designs.
  • Accessories (28% of net sales): These include small leather goods, novelty accessories, and belts.
  • Other products (9% of net sales): These include footwear, business cases, jewelry, wearables, sunwear, travel bags, fragrance, and watches.[3]

Trends and Forces

Coach Seeks to Take Advantage of China's Growing Affluent Class

Coach has primarily stayed focused in North America and Japan. However, China is becoming an increasingly important market for luxury retailers. The rise of China's middle class has led to an increase in disposable income and thus an increase in potential customers. China spends more than $2 billion a year on luxury products.[4] What this means is that there is a growing affluent class in China that is capable of purchasing Coach products across all price points.

Luxury Image Essential for Sales

As with any luxury or affordable luxury retailer, Coach heavily relies on an image of exclusivity to fuel interest and sales of its products. A luxury company can lose its "luxury" status if the brand becomes too popular or too accessible. Coach thus takes a risk by having factory stores that sell discounted merchandise. None of Coach's competitors, such as Louis Vuitton and Gucci, have factory stores--they would be in direct opposition to the air of exclusivity the brands seek to cultivate. However, Coach protects its luxury status by placing its factory stores at least 60 miles away from its full-price locations.[5] In addition, the factory stores never sell the latest merchandise--they sell last year's or irregular pieces in addition to products that are manufactured specifically for the factory store. Coach never has sales at its full-price stores and does not allow retailers such as Macy's Inc. (M) to discount its merchandise. The result of these actions is that the factory stores and flagship locations serve two different demographics and are separate enough that the factory segment does not tarnish the overall image of the brand.[5]

Competition

Most of Coach's closest competitors are either privately owned or owned by larger European conglomerates of various luxury brands. Consequently, comparative data is unavailable. This includes Louis Vuitton and Fendi, both owned by LVMH Moet Hennessy L.V. (LVMUY), and Gucci Group.

Coach's business model is chiefly distinguished by its stress on "accessible luxury." This model thus reaches a larger demographic compared to many of Coach's higher-priced competitors, including Louis Vuitton, Gucci, and Prada. These competitors tend to focus on a higher income, high-fashion demographic. Companies like Dooney & Burke and Cole Haan also stress "accessible luxury" and are Coach's most successful competitors; however, Coach's market share has continued to increase in their presence.


References

  1. Luxury Spending Sees a Boost
  2. Coach website
  3. http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDE1NzM1fENoaWxkSUQ9NDI3ODU1fFR5cGU9MQ==&t=1
  4. Joseph Chaney. Handbag brand Coach plans major expansion in China..
  5. 5.0 5.1 Coach's Split Personality.
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