Employees: 15 800, globally
Fiscal year ends: 30 June
Headquarter: New York, US
Products: Design house of luxury accessories and lifestyle collections for women and men
Rating (long-term): BBB- (S&P), Baa2 (Moody’s)
Competitors: Kate Spade, Michael Kors, LVMH Moet Hennessy Louis Vuitton, Hermes, The Swatch Group, Tiffany, Christian Dior, Pandora
within handbags and accessories, as well as in the broader set of lifestyle categories been less developed, including footwear and ready-to-wear.
Coach operates in three segments: North America (Coach brand), International (Coach brand), and Stuart Weitzman. The Stuart Weitzman segment
includes worldwide sales generated by the Stuart Weitzman brand.
Coach is focused on four key initiatives, which directly align with the Coach brand:
• Grow business in North America and worldwide
• Leverage the global opportunity for Coach by raising brand awareness and building market share where the Coach brand is underpenetrated
• Focus on the Men’s opportunity for the brand
• Harness the growing power of the digital world
Coach reported improvement in comparable-store sales in Q3. Broad-based strength in the revenue continued in the recent quarter.
The company is moving from a more defensive posture in its transformation to an aggressive posture of strength but continues to struggle with maintaining profitability.
Lower margins are seen across the board. Nevertheless, gross, opearting and net margins are still high and it is obvious they will be lower going forward.
Profitability is Stable-:
Given the company’s sharp decline in ROE and ROA during the lasr fiscal year, there is a reasonable basis to expect nearly the same levels this fiscal year.
Additionally, taking into account Free cash flow margin, it seems that it is still to early to bet on the potential upside at Coach.
The company is going to have a tough road to sustainable profitability.
Financial health is High-:
Coach’s solvency ratios are all favorable, including debt to equity, debt to assets and leverage.
These ratios indicate the company’s ability to meet its debt and other obligations.
Valuation price: Valuation price: $31.11 => is currently overvalued by 24% based on fundamentals.
Globally, luxury industry has been slowing down and is very saturated with a multitude of sellers within the industry. The valuation price takes into account that
sales growth can be achieved by taking market share away from competitors
Last stock splits: 2:1 (05.04.2005), 2:1 (02.10.2003), 2:1 (05.07.2002)
Share repurchase: flat
1941 The Coach brand was established in New York City. The company started with just six leather workers who made small leather goods,
primarily wallets and billfolds, by hand.
1946 Miles Cahn, a lifelong New Yorker, came to work for the company
1950 Cahn begins running the factory for its owners.
1960 The Coach brand of sturdy cowhide purses is introduced and becomes the company’s signature, luxury, trademark.
1985 Coach was purchased by the Sara Lee Corporation.
2000 October 4th, The company went public under the symbol COH at a price of $16.00 per share
2011 Coach became the first company incorporated in the United States to list in Hong Kong
Disclosure: Billion Trader has no positions in any stocks mentioned, the valuation is based on the own model developed and tested by Billion Trader. Billion Trader is not responsible for any loss arising from information provided.