QUOTE AND NEWS
Benzinga  Jun 22  Comment 
In a report published Monday, Bernstein analyst Anne-Charlotte Windal said that the results reported this quarter "make us on the margin more optimistic about underlying domestic category growth" in the handbag segment. Analyst Anne-Charlotte...
Market Intelligence Center  Jun 19  Comment 
After Thursday’s trading in Coach Inc. (COH) MarketIntelligenceCenter.com's patented algorithms uncovered a trade that offers a 3.86% return or 22.35% on an annualized basis (for comparison purposes only), while providing 5.87% downside...
TheStreet.com  Jun 8  Comment 
NEW YORK (TheStreet) -- Coach  had its stock price target lowered to $34 from $35 by analysts at Sterne Agee with a "neutral" rating. "Investment spending is likely to spike in fiscal year 2016, which should lead to further margin contraction...
Market Intelligence Center  Jun 2  Comment 
The patented options-trade picking algorithms used by MarketIntelligenceCenter.com found a trading opportunity with Coach Inc. (COH) that should provide a 3.98% return in just 80 days. Sell one Aug. '15 call at the $35.00 level for each 100 shares...
TheStreet.com  May 27  Comment 
NEW YORK (TheStreet) -- Shares of Coach Inc  were down 5.2% to $34.66 on heavy volume in late morning trading Wednesday, after analysts at BB&T Capital started coverage on shares of the handbag designer late Tuesday. The firm initiated...
Motley Fool  May 26  Comment 
The handbag maker could recover from recent stumbles if these stars align in its favor.
Market Intelligence Center  May 21  Comment 
Wednesday’s trading in Coach Inc. (COH) gives options traders an opportunity for a 17.65% return. By selling the Aug. '15 $37.00 call and buying the Jan. '16 call at the $30.00 level for a net debit of $5.95, traders will book a profit as long...
Jutia Group  May 15  Comment 
[Business Wire] - Coach, Inc. , a leading New York design house of modern luxury accessories and lifestyle collections, today announced that its Board of Directors has declared a quarterly cash dividend of $0.3375 per common share. Read more on...
TheStreet.com  May 14  Comment 
NEW YORK (TheStreet) -- Shares of Coach  are falling 1.14% to $37.70 as Wedbush analysts initiated coverage with a "neutral" rating for the luxury retailer and a price target of $37. Coach's share price has already fully valued the company's...
Benzinga  May 11  Comment 
In a report published Monday, Cowen and Company analysts maintained a Market Perform rating on Coach Inc (NYSE: COH), while raising the price target from $41 to $43, following a meeting with the company's CEO Victor Luis, CFO Jane Nielsen and...




 

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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