QUOTE AND NEWS
SeekingAlpha  7 hrs ago  Comment 
By Northport Investments: To say that Coach's (NYSE:COH) 2014 stock performance has been difficult seems to be an understatement. Since the beginning of 2014, COH's share price is down over 40% and has been repeatedly hitting 52-week lows since...
SeekingAlpha  Jul 17  Comment 
ByBrian Grosso: Business Coach (NYSE:COH) was founded in 1941 and designs and sells (but does not manufacture internally) handbags and accessories under the Coach brand. I like that the company outsources manufacturing to independent...
Motley Fool  Jul 15  Comment 
Michael Kors has been the biggest loser on the S&P 500 for two days in a row thanks to a flurry of bad news.
Market Intelligence Center  Jul 15  Comment 
After closing Monday at $33.99, Coach Inc. (COH) presents an attractive opportunity to get a 5.63% return in just 130 days, which is an annualized return of 15.82% (for comparison purposes only). To enter this trade, sell one Nov. '14 $33.00 call...
SeekingAlpha  Jul 14  Comment 
By Alpha Strategist: What to Infer from the Recently-Ended Quarter's Results Coach (NYSE:COH) was once one of the leading fashion accessories brands and has seen tough times since 2012. For the third quarter ended, operating income fell to...
Motley Fool  Jul 14  Comment 
Coach has been hammered by the market and now offers a very juicy dividend yield, but will that be enough to entice investors to jump in?
Market Intelligence Center  Jul 10  Comment 
MarketIntelligenceCenter.com's patented algorithms have identified an attractive covered-call trade on Coach Inc. (COH). Look at the Nov. '14 $34.00 covered call for a net debit in the $31.90 area. This trade has a duration of 135 days. The...
Motley Fool  Jul 9  Comment 
All three of today's laggards boast hefty dividends, but dividends alone weren't winning over investors today
Motley Fool  Jul 9  Comment 
Michael Kors just announced a new head for its men's division, and it looks like the company is going all in.
Benzinga  Jul 9  Comment 
Buckingham Research analyst David Glick downgraded shares of Coach (NYSE: COH) from Neutral to Underperform and cut the price target from $32.00 to $28.00. Glick noted that Coach will need to raise more debt and possibly cut the deal next year...




 

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.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki