# Coach (COH)



## PMREdmonton (Apr 6, 2009)

The stock price has been devastated after disappointing sales growth and EPS growth of around 4% in the most recent quarter. Their PE is now around 14. I still think they are gushing cash, have high customer royalty and still have avenues for major growth in Asia and their men's product line which is gaining traction. I think they are also looking into broadening the brand into new design type avenues and I am betting this will be met with at least some degree of success. They also pay a decent dividend of 2.5% and have quadrupled it over the last four years. There seems to be a strong commitment to the dividend and the company is buying back lots of stock at current prices with their cash pile.

The bear case is North American sales seem to be weakening and I think there is worry about some erosion from Michael Kors and perhaps an appetite for less luxury items overall. 

What are your guys' thoughts on this one. Are they a buy at current prices?


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## supperfly17 (Apr 18, 2012)

All I know is that my wife is not interested in buying coach purses anymore. Couple of years ago it was all about Coach, these days i rarely hear about it, fad over?


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## Plugging Along (Jan 3, 2011)

^ I would agree with this statement. Coach has lost alot of it's 'exclusitivity'. It used to be that you could only get them at the Coach store or the high end shops, and if you were lucky you could get them at the factory outlet. Now, they are at places such Winners, and many other places. It was considered 'an affordable luxery item'. Now, it's considered too common to be luxery. 

I think they entered a new market without that intention.


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## Sampson (Apr 3, 2009)

PMREdmonton said:


> and still have avenues for major growth in Asia


Don't know about this.

I would count Coach as a 2nd tier high-end brand, and given the popularity of brands like LV in Asia, unlikely people will want a lesser brand.


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## peterk (May 16, 2010)

Got my girlfriend some coach handbag at an outlet last year. If _I_ can afford it it's certainly not an upper-class luxury item! haha


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## jcgd (Oct 30, 2011)

They are affordable luxury. I'm long and it's a rather large position for me but I will admit, I'm getting shaky. I'm wondering if I should start learning about stop losses. 

Good
- I think they are a more timeless brand than some others. 
- Affordable luxury, not luxury. The average Joe can afford Coach. 
- Michael Kors is killing it and Coach is feeling it, but is not getting crushed. 
- Coach has 40% yoy growth in China. And the chinese like to show status so that good for business.
- My girlfriend thins MK is more of a fad than a new staple. This is just a plus one for me, not meant for others. 
- coach hasn't been giving the same discounts like other stores to compress margins. 

Bad
- Michael Kors is killing it. 
- Michael Kors is stealing some market share. 
- Coach has too many factory outlet stores. Shrinking margins and lowering brand exclusiveness. 

Good or bad?
- Coach is trying to reinvent itself as a lifestyle brand. 

Long and short of it, I think the hard environment in North America is temporary and I think the stellar China growth is a nice catalyst.


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