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Coach Announces Its Sale of 10 Hudson Yards for $707 Million

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Nov. 20 2020, Updated 10:38 a.m. ET

Price movement

Coach (COH) has a market cap of $12.1 billion. It rose by 0.81% to close at $43.46 per share on August 1, 2016.

The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.46%, 6.7%, and 35.1%, respectively, on the same day. COH is trading 2.9% above its 20-day moving average, 8.0% above its 50-day moving average, and 20.6% above its 200-day moving average.

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Related ETF and peers

The ALPS Sector Dividend Dogs ETF (SDOG) invests 2.0% of its holdings in Coach. The ETF tracks an equal-weighted index of the five highest-yielding S&P 500 securities in each sector. The YTD price movement of SDOG was 19.4% on August 1.

The market caps of Coach’s competitors are as follows:

  • Estée Lauder Companies (EL) — $34.2 billion
  • Ralph Lauren (RL) — $8.0 billion
  • Michael Kors Holdings (KORS) — $9.4 billion

Latest news on Coach

In a press release on August 1, 2016, Coach reported that it had “announced the sale-leaseback of its global headquarters at 10 Hudson Yards in New York City.”

The release said, “The company received a purchase price of ~$707 million (net of $77 million due to the developer of Hudson Yards) before transaction costs of $26 million, resulting in a gain of about $30 million which will be amortized over 20 years. Coach has simultaneously entered into a 20-year lease for the headquarters space.”

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Coach in fiscal 3Q16

Coach reported fiscal 3Q16 net sales of $1.0 billion, a rise of 11.2% from $929.3 million in fiscal 3Q15. In fiscal 3Q16, it opened two stores in North America, two in Japan, four in Greater China, two in the rest of Asia, and two in Europe.

In the quarter, the company also opened one Stuart Weitzman store. Coach’s net income and earnings per share (or EPS) rose to $112.5 million and $0.40, respectively, in fiscal 3Q16, compared to $88.1 million and $0.32, respectively, in fiscal 3Q15.

Coach’s cash and cash equivalents and short-term investments and inventories fell by 16.0% and 4.3%, respectively, between fiscals 4Q15 and 3Q16. Its current ratio rose to 3.1x, and its debt-to-equity ratio fell to 0.78x in fiscal 3Q16 compared to 3.0x and 0.87x, respectively, in fiscal 4Q15.

Projections

Coach has made several projections for fiscal 2016:

  • Coach brand revenue growth in the low single digits in constant currency terms on a 52-week basis
  • foreign currency to hurt revenue growth by 2.3%–2.5%
  • Coach brand’s operating margin to be in the mid to high teens
  • an interest expense of ~$30 million
  • a tax rate of ~28%

These projections don’t include pretax charges for the following:

  • a transformational plan of ~$50 million
  • Stuart Weitzman acquisition charges of ~$30 million
  • charges related to operational efficiency initiatives

Coach expects the 53rd week of fiscal 2016 to contribute $75 million–$80 million in incremental revenue and $0.06 in EPS.

For an ongoing analysis of this sector, please visit Market Realist’s Consumer Discretionary page.

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