QUOTE AND NEWS
Motley Fool  Dec 19  Comment 
Luxury goods giant LVMH is reportedly interested in acquiring Coach. Here are three reasons why that move could make perfect sense.
TheStreet.com  Dec 18  Comment 
NEW YORK (TheStreet) -- Shares of Coach Inc.  were up by 1.71% to $36.36 in pre-market trading, before going flat, on Thursday, after analysts at Oppenheimer initiated coverage on the stock with a "Perform" rating and $36 price target. The...
Benzinga  Dec 12  Comment 
After being on a continuous slump the whole year, shares of luxury retailer Coach Inc (NYSE: COH) have seen an upsurge since the last two days on rumors that the French luxury goods conglomerate, LVMH, might be interested in buying the company....
TheStreet.com  Dec 12  Comment 
NEW YORK (TheStreet) -- Coach Inc.  shares are up 2.2% to $35.22 on Friday after the luxury fashion brand was rumored to be a takeover target by rival LVMH Moet Hennessy Louis Vuitton  . Coach, which has declined 40% so far this year,...
Benzinga  Dec 11  Comment 
Accessories retailer Coach Inc (NYSE: COH) has had a terrible 2014; The company’s stock is down around 40 percent year-to-date. However, the stock witnessed a sudden upsurge on Thursday and closed the day 2.5 percent higher at $34.46. Joe...
Forbes  Dec 2  Comment 
The worst performing sector as of midday Tuesday is the Consumer Products sector, higher by 0.2%. Within that group, Coach (NYSE: COH) and Monster Beverage (NASD: MNST) are two of the day's laggards, showing a loss of 3.0% and 1.6%, respectively....
Benzinga  Nov 26  Comment 
Ike Boruchow of Sterne Agee recently held a conference call with Coach Inc's (NYSE: COH) management team, including Andrea Resnick, Global Head of Investor Relations and Christina Colone, Director of Investor Relations. Boruchow concluded in a...
Market Intelligence Center  Nov 25  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center are highlighting two trades on Coach Inc. (COH) today after it closed at $37.41 on Monday. For more conservative investors, look...
Jutia Group  Nov 21  Comment 
[Entrepreneur] - There is great value to be had from a skilled coach, but only if you are "coachable'' to begin with. Read more on this. Coach, Inc. (COH), with a current market cap of $10.05B, opened at $36.60.   Looking at the stock, its...
Market Intelligence Center  Nov 20  Comment 
MarketIntelligenceCenter.com's patented algorithms have identified an attractive covered-call trade on Coach Inc. (COH). Look at the Feb. '15 $35.00 covered call for a net debit in the $33.29 area. This trade has a duration of 92 days. The...




 

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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