QUOTE AND NEWS
Forbes  Dec 5  Comment 
Looking at the universe of stocks we cover at Dividend Channel, on 12/7/16, La-Z-Boy Inc. (NYSE: LZB), Coach, Inc. (NYSE: COH), and Lear Corp. (NYSE: LEA) will all trade ex-dividend for their respective upcoming dividends. La-Z-Boy Inc. will pay...
Motley Fool  Nov 25  Comment 
The last quarter offered up both good and bad, but upon closer examination the company is managing its new look and feel very well.
Motley Fool  Nov 1  Comment 
The retailer managed a few important changes to its business that should pay off in the years ahead.
Benzinga  Nov 1  Comment 
Think you know the markets? See if you can guess this stock by the chart and clues below. Answer is at the bottom.  This company reported Q1 EPS on Tuesday of $0.45 vs $0.45 Est, Revenue $1.04B vs $1.07B Est, and said they expect their...
Benzinga  Nov 1  Comment 
Coach Inc (NYSE: COH) reported mixed results for the first quarter. While adjusted EPS came in line, revenue fell shy of expectations. The company maintained its fiscal year 2017 outlook. Reports 10 increase in adjusted EPS to $0.45, in line...
newratings.com  Nov 1  Comment 
WASHINGTON (dpa-AFX) - Coach, Inc. (COH), a New York design house of modern luxury accessories and lifestyle brands, on Tuesday said it continues to project double-digit growth in both net income and earnings per share for fiscal 2017. The...
newratings.com  Nov 1  Comment 
WASHINGTON (dpa-AFX) - Coach Inc (COH) announced a profit for its first quarter that advanced compared to the same period last year. The company said its bottom line rose to $126.0 million, or $0.45 per share. This was higher than $113.1...
Forbes  Oct 24  Comment 
Investors in Coach, Inc. (NYSE: COH) saw new options become available today, for the December 16th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the COH options chain for the new December 16th contracts and...
Benzinga  Oct 21  Comment 
Shares of Coach Inc (NYSE: COH) and Burberry Group plc (OTC: BURBY) (OTC: BBRYF) traded up in Friday’s pre-market session, after the Betaville blog reported that sourced had said that the two companies are working on a $20 billion...




 

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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