QUOTE AND NEWS
The Market Financial  Jul 30  Comment 
Coach Inc (NYSE:COH) is making a bullish consolidation pattern on the intra-day chart. The key here is that the pattern is forming above the 200 moving average and is happening while the markets are reversing sharply off early gains. When this...
SeekingAlpha  Jul 30  Comment 
By The Brand Value Investor: The Situation Coach (NYSE: COH), a world-renowned designer of luxury handbags and accessories, has been placed on the clearance rack. After failing to meet lofty expectations set by Wall Street Analysts and giving...
SeekingAlpha  Jul 29  Comment 
ByMarshall Hargrave: Over the last month, shares of Michael Kors Holdings (NYSE:KORS) are down 7%. Meanwhile, its top peer Coach (NYSE:COH) is essentially flat. This comes amid an apparent rise of promotions offered by Kors, which is signaling...
SeekingAlpha  Jul 28  Comment 
By Shock Exchange: Picture: Coach Bag. Source: newsofsalemcounty.com Coach, Inc. (NYSE:COH) is set to announce its quarterly earnings on Monday. The die was cast when during its June 19th Investor Day, management delivered bad news that revenue...
Motley Fool  Jul 25  Comment 
Coach has watched its stock get creamed in 2014, but could a strong fourth-quarter earnings report turn things around?
SeekingAlpha  Jul 24  Comment 
By Gemstone Equity Research: Coach Inc. (NYSE:COH) is a hot discussion point for investors as they have no clue where this company is going. Investors should put recent past figures aside and focus on the execution of upcoming plans. This company...
SeekingAlpha  Jul 22  Comment 
By John Wideman: Elevator Pitch Due to competition and lackluster recent results, Coach (NYSE:COH) has fallen almost 40%. While some drop is warranted, the stock has fallen too far and now presents solid value. Company...
Benzinga  Jul 21  Comment 
In a report published Monday, Morgan Stanley analyst Kimberly C. Greenberger reiterated an Underweight rating and $29.00 price target on Coach (NYSE: COH). In the report, Morgan Stanley noted, “We do not expect 4Q to serve as a catalyst, as...
SeekingAlpha  Jul 19  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...




 

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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