Coach Company Case Study
In the fiscal year ended on July 3, 2010, Coach filed a net income a little shy of $735 million dollar with over $3.6 billion worth in global sale. The net sales rose 12 percent compare to 2009 and net income increased by 18 percent. The growth has been largely contributed by its continuation to expand its stores to widen its geographic coverage, particularly its operation in China since its entry in early 2010. The company has been logging a constant growth over the last few years due to its unique brand positioning as a luxury brand at an affordable price. Coach has been named the most competitive brand in the luxury handbags category according to Luxury Brand Market Analysis (LBMA). The company image of an “affordable luxury” has proven to successfully appeal to both affluent customers who appreciate the premium brand and quality product it has to offer and middle-class customers who search for affordability. Coach operating margin has been in the range of 30 to 36 percent. Bags and accessory sales rose 15% across all channels in North America, 18% rose in direct sales. The company currently seeks to capitalize on the increasing demand for luxury product in emerging economy, particularly in China as an initiative in transforming Coach into a global brand. Coach success also contributed by the way customers are captured through unique distribution channel of full priced store, flagship store, major retailer, and factory store. Its strategy of consistent quarterly product launch also provides consumers with excuses to increase their visits to the store and increases annual purchase per customer.
Coach revenue is divided into two major segments:
Direct to consumer consists of all retail and factory stores which Coach operates primarily in United States, Japan, and China. These stores accounted for 84% of fiscal year 2009 sales.
Indirect to consumer consist of wholesales to department stores in United States and abroad, which accounts for 16% of fiscal year 2009 sales.
Year (ended June)
Operating Revenue (millions)
Operating Profit (millions)
Net Income (millions)
Net Profit Margin
N. America Same Store Sales Change
The most rapid contributor to Coachs growth is the company success in capturing emerging market, notably in Asia with China. Previously, the company investment in international arena mainly focused only in Japan,