Coach Inc ITs strategy in the accessible luxury goods market

Topics: Luxury good, LVMH, Branding Pages: 25 (6059 words) Published: September 6, 2014
Case Study 7:
Coach Inc. in 2012:

ITs strategy in the accessible
luxury goods market
__GROUP 8_

GROUP MEMBER
Name

Class

Roaster ID

Student ID

Nguyễn Hải Anh

AFA54A

01

11120068

Tạ Yến Ngọc

AFA54A

29

11122843

AFA54A

31

11123066

Nguyễn Ngọc Phương AFA54A

32

11123139

Phạm Trung Thành

AFA54A

36

11123531

Trần Ngọc Trung

AFA54A

45

11124302

Vũ Ngọc Diệp

AFA54A

05

11120600

Trần Quang Hiếu

AFA54A

17

11121414

Đào Minh Ngọc

AFA54A

30

11122808

Ngô Bảo Trung

AFA54A

47

11124286

Tạ Sơn Tùng

AFA54A

49

11124451

_ Anh Phương
Đinh

table of content
CHAPTER 1: Executive Summary
CHAPTER 2: CASE ANALYSIS
CHAPTER 3: CONCLUSION

1-2

CHAPTER 1 | EXECUTIVE SUMMAry
Recommendation: BUY
Our Group is announcing their coverage of Coach Inc. After reviewing all aspects of the firm we have decided to give Coach a BUY rating with high future predictability and a price target of $64 at year end. Industry Success

Coach is in the Luxury apparel and accessories industry and considers themselves a small company with large scales. The apparel and accessories industry has seen weak returns over the industry as a whole. Coach however has experienced extreme success over the past several years and seems to have found a niche in the highly competitive market. Coach has recorded very high profit margins and has emerged as a leader in the industry. Coach has achieved these results by selling high end quality products and establishing a well respected and solid brand image.

Marketing Strategy
Much of Coach’s success comes from their successful marketing strategy. Coach has been able to avoid becoming the trendy one hit wonder company by carefully marketing their products. One thing that Coach deliberately does not do is market to teenagers or younger people. Coach feels that if they advertise to this group they endanger themselves of becoming the trendy or one hot item for a season and they fear that if they market to younger consumers they could begin to lose their large and loyal older customer base. Financial Position & Growth

Coach’s current financial position is very strong and the company still has room for further growth. Coach is currently accumulating a sizeable cash base which they plan to reinvest into the company. Coach also has very little debt on their balance sheet and almost no long-term debt. As a result of this Coach has a very favorable current ratio of over 3 and a low debt to equity. Coach also has industry leading profit and selling margins. Coach has also been expanding their business in Japan where they have seen increasing success. Currently Japan accounts for about 20% of all of Coach’s business.

Valuations
1

Coach’s common stock is currently trading at about $56 and has traded as high as $59 over the past 12 months. Coach’s fiscal year ends on the Saturday closest to June 30 and for fiscal year 2005 we estimate EPS of $1.93 and EPS of $2.06 for 2006.

Investment Risks
Although Coach is currently performing very well for their market, there are some risks for investing in stocks in the apparel and accessories industry. Since this industry is known to follow trends one must pay close attention to current news for the industry and the individual stocks. We currently believe that Coach provides a great buying opportunity but this could come to an end if Coach is not able to keep up with changing trends in the market or they could be hurt by emerging competitors. However, Coach is showing that they can be dominant in this type of market.

2

CHAPTER 2 | CASE analysis
Question 1: What are the defining characteristics of luxury goods industry? What is industry like?
The definition of a luxury good is a product that gives great ease and comfort. Some characteristics of the industry include superior quality, brand recognition, and is said to have high income elasticity of...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Coach Inc. case analysis Essay
  • Coach Inc. Essay
  • Coach Inc. Essay
  • Luxury Goods Market in China Essay
  • Coach Inc Essay
  • Coach Inc Essay
  • Coach Inc. Case Study Research Paper
  • Coach Inc Essay

Become a StudyMode Member

Sign Up - It's Free