QUOTE AND NEWS
Benzinga  Aug 22  Comment 
Cowen analyst, Oliver Chen, expressed his optimism about Coach Inc (NYSE: COH) shares. The confidence was due to its Consumer Tracker Survey, which indicated gains on a year-over-year basis in June and July. The brokerage maintains its Outperform...
Benzinga  Aug 10  Comment 
Argus maintained its Hold rating on Coach Inc (NYSE: COH) saying it's beginning to see tangible signs that consumers' perceptions of the Coach brand are improving. Coach is working its way to restore its image as a designer of high-quality...
Forbes  Aug 9  Comment 
Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in Ralph Lauren Corp (NYSE: RL), where a total volume of 10,244 contracts has been traded thus far today, a contract volume which is...
Benzinga  Aug 9  Comment 
Taking a look back at last week's Benzinga Pro headlines, there are several stocks whose turnaround story have been under the watchful eye of sell-side analysts. The Headline: "Chardan Analyst Believe iPass Inc. (NASDAQ: IPAS)' Turnaround...
newratings.com  Aug 9  Comment 
WASHINGTON (dpa-AFX) - Coach, Inc. (COH) said that it projects double-digit growth in both net income and earnings per share for fiscal 2017. The Company expects revenues for fiscal 2017 to increase by low-to-mid single digits, including an...
Benzinga  Aug 9  Comment 
Coach Inc (NYSE: COH) announced results for the fourth quarter ensuring the string of pleasant earnings surprise continued. In the preceding four quarters too, its earnings topped the Street estimates. However, its revenue fell shy of the...
Benzinga  Aug 8  Comment 
With Coach Inc (NYSE: COH) set to release fiscal Q4 earnings ahead of the market open on Tuesday morning, Deutsche Bank analyst Dave Weiner has outlined what investors should be watching for. Of course, revenue and earnings will be important, but...
Benzinga  Aug 7  Comment 
Upcoming earnings highlights include the latest results from two leading consumer goods makers. Wall Street analysts are looking for earnings growth from just one of them. However, both have exceeded revenue expectations in recent...
Yahoo  Aug 5  Comment 
These are the stocks posting the largest moves before the bell.




 

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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