QUOTE AND NEWS
Market Intelligence Center  Feb 3  Comment 
For a hedged play on Coach Inc. (COH) MarketIntelligenceCenter.com’s algorithms selected the May. '15 $37.00 covered call for a net debit in the $35.04 area. That is also the break-even stock price for the covered call. This trade will return...
Benzinga  Feb 2  Comment 
Coach Inc's (NYSE: COH) ambitious turnaround plan will cut costs and spruce up stores, but its success hinges on offering handbags that women want to own, an analyst said Monday. The company posted a decline in North American same-store sales...
TheStreet.com  Jan 30  Comment 
NEW YORK (TheStreet) -- Shares of Coach  closed lower by 4.49% to $37.19 in Friday's regular trading session, reversing some of yesterday's gains after the company said profit and sales took a hit in its latest earnings report, the Wall Street...
Forbes  Jan 30  Comment 
Looking at the sectors faring worst as of midday Friday, shares of Consumer Products companies are underperforming other sectors, showing a 1.1% loss. Within the sector, PACCAR (NASD: PCAR) and Coach (NYSE: COH) are two large stocks that are...
Benzinga  Jan 30  Comment 
After Coach Inc’s (NYSE: COH) big earnings beat this week, Credit Suisse analysts released a report updating their outlook for the stock. Although the positive earnings report was a good sign for the company in the short-term, analysts feel that...
Motley Fool  Jan 29  Comment 
Coach's latest earnings report is providing encouraging news for investors. While Coach is not definitively out of the woods, the turnaround seems to be making progress.
Motley Fool  Jan 29  Comment 
Investors need to keep in mind that Wall Street had low expectations for Coach in the quarter.
Jutia Group  Jan 29  Comment 
[Business Wire] - NEW YORK--(BUSINESSWIRE)-- Coach, Inc. (NYSE:COH) (SEHK:6388), a leading New York design house of modern luxury accessories and lifestyle collections, today announced sales of $1.22 billion for its second ... Read more on this. ...
Jutia Group  Jan 26  Comment 
[Business Wire] - Coach, Inc. , a leading New York design house of modern luxury accessories and lifestyle collections, today announced that, in order to ensure the safety of its employees impacted by weather and transit conditions as a result of...




 

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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