QUOTE AND NEWS
Reuters  Feb 24  Comment 
Michael Kors Holding Inc and Coach Inc are among the companies that have made it through to the second round of bidding for handbag and accessories maker Kate Spade & Co , people familiar with the situation said on Friday.
Motley Fool  Feb 10  Comment 
But Under Armour had an unusual stumble in the holiday quarter.
Benzinga  Feb 1  Comment 
Coach Inc (NYSE: COH) reported strong Q2 results, despite concerns around the handbag category. The company’s positive trends would likely continue for the balance of the fiscal year, ending June, Wedbush’s Morry Brown said in a report. He...
Motley Fool  Jan 31  Comment 
The retailer stayed on track by posting minor sales gains and a significant earnings improvement for its fiscal second quarter.
Clusterstock  Jan 31  Comment 
Coach plans to use social media to boost its brand in 2017. On its second quarter earnings call, the company announced it is partnering with pop star Selena Gomez.  "Of course, signing Selena Gomez as the new face of Coach will amplify the...
Wall Street Journal  Jan 31  Comment 
Coach Inc. said earnings and revenue rose in the most recent quarter as the retailer pulled back from its struggling North American wholesale business.
newratings.com  Jan 31  Comment 
WASHINGTON (dpa-AFX) - Coach, Inc. (COH) announced the company continues to project double-digit growth in both net income and earnings per share for fiscal 2017. The company said it is maintaining operating margin forecast for Coach, Inc. of...
newratings.com  Jan 31  Comment 
WASHINGTON (dpa-AFX) - Coach Inc (COH) revealed earnings for its second quarter that advanced compared to the same period last year. The company said its bottom line came in at $211.2 million, or $0.75 per share. This was up from $188.4 million,...
Benzinga  Jan 30  Comment 
Coach Inc (NYSE: COH) is scheduled to report its fiscal second quarter results after Tuesday's close and there is plenty of data points to look out for. According to Dave Weiner of Deutsche Bank, Coach's stock has remained relatively flat...




 

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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