QUOTE AND NEWS
SeekingAlpha  Mar 27  Comment 
By Efficient Alpha: Shares of Coach Incorporated (COH) have gone nowhere over the last several years and sentiment seems about as low as it can go. International growth has not yet offset large declines in North American sales and competitors have...
SeekingAlpha  Mar 19  Comment 
ByNick Clayton: As I was driving home from a lovely weekend getaway, I noticed a bright attractive looking store with the bold letters C-O-A-C-H in an outlet mall off the freeway. I had heard about Coach (COH) before but never gave it much...
Forbes  Mar 14  Comment 
In early trading on Friday, shares of Coach (COH) topped the list of the day's best performing components of the S&P 500 index, trading up 3.5%.  Year to date, Coach has lost about 11.1% of its value.
SeekingAlpha  Mar 11  Comment 
By Alpha Strategist: Coach Inc.'s (COH) second-quarter earnings fell short of analysts' estimates. The company's stock price is at a 52-week low. In this article I will determine whether or not Coach is a good candidate for long-term investment or...
SeekingAlpha  Mar 3  Comment 
By Nick Mackintosh: Company Information Coach Inc. (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,"...
StreetInsider.com  Feb 14  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Dividends/Coach%2C+Inc.+%28COH%29+Declares+%240.3375+Quarterly+Dividend%3B+2.8%25+Yield/9172009.html for the full story.
SeekingAlpha  Jan 28  Comment 
By Blackstone Equity Research: Coach Inc. (COH), a prominent New York designer and retailer of modern luxury accessories for men and women, recently reported its Q2 fiscal 2014 earnings. The company's revenue declined by around 6% during the...
SeekingAlpha  Jan 27  Comment 
By Zacks Investment Research: It's getting to be a quarterly habit for Coach (COH). The EPS-miss-and-gap-down that is. I last wrote about the decline and fall of this once great luxury fashion retailer in August after their Fiscal Year 2013...
Trading with the Average Jay  Jan 27  Comment 
1. Short trade in Coach, Inc.(COH) entry on break of whole number $49. Covered below on pullback for profitable trade.   2. Long trade open on break of prior high Vodafone Group Plc (ADR) (VOD). She turned and went lower. I covered for a ...




 

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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