Coach, Inc. (COH) started out in 1941 as a family-owned business manufacturing handbags in a Manhattan workshop. In 1985, Coach was acquired by Sara Lee. In 2000, 19.5% of Coach’s outstanding shares were sold to investors and the company was listed on the New York Stock Exchange. In 2001, Sara Lee sold the remaining Coach shares to existing shareholders via an exchange offer. Sara Lee has since split into two companies, one of which now forms part of Hillshire Brands (HSH).
Coach is now a company valued at over $10 billion. It’s one of the world’s leading fashion accessory brands. The company’s products target the affordable luxury business and include handbags, watches, footwear and apparel, among other things. The company’s considered one of the pioneers of the luxury industry.
The firm’s major markets are North America, China, and Japan. It also has a sales presence in 35 other countries worldwide, either through directly owned stores or wholesale agreements with other retailers, department stores, and distributors.
Transforming an industry pioneer
Coach is a well-known and reputed premium fashion brand. In recent years, Coach has faced increasing competition from newer entrants in the affordable luxury market including Michael Kors (KORS), Kate Spade (KATE), and Tory Burch, among others. Currently, the company is in the process of implementing a transformation plan designed to reverse the fortunes of the firm.
In this series, we’ll provide you with an overview of the company’s operations and financials, the competitive dynamics of the market it operates in, key growth drivers, and an investor’s analysis of future sources of upside.
Acquirer or target?
In recent quarters, there’s been considerable speculation that Coach could be ripe for restructuring through a merger and acquisition by a top-tier luxury brand or a leveraged buyout by private equity players. Some of the names discussed include the world’s largest luxury firm, LVMH Moet Hennessy Louis Vuitton (LVMUY). We’ll discuss the likelihood and implications of a merger or acquisition.
We’ll also take a look at the key takeaways of Coach’s (COH) recently announced acquisition of premium footwear manufacturer, Stuart Weitzman.