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Coach Eyes Modern Luxury Concept Stores amid Competition - Analyst Blog

Zacks Equity Research
Updated

It seems that Coach, Inc. COH is gearing up to redefine and rebrand itself amid this ever-changing and competitive retail landscape. This is evident from the fact that this designer and marketer of fine accessories and gifts is gradually transitioning and opening stores under a modern luxury concept, and steadily diversifying its business.

The company already has 20 stores under the new concept. During the second quarter of fiscal 2015, Coach opened a new flagship store in Shinjuku in Tokyo and a boutique in Shin Kong Place in Beijing. The company plans to renovate 150 retail locations in fiscal 2015 and open 50–60 new outlets globally, under the new modern luxury concept.

Coach recently announced the opening of its first flagship store in Paris under the modern luxury concept and will showcase its collection of products including ready-to-wear, shoes, sunwear, jewelry, watches and fragrances for both men and women. Management foresees greater opportunity in the European market and had earlier pointed out that it plans to add 10 directly operated locations and over 100 wholesale locations.

Coach boasts a proven strategy of investing in stores to enhance store sales productivity through product innovation, compelling pricing strategy, new merchandise assortments and a cost-effective global sourcing model. We believe that this strategy will help drive comparable-store sales and operating margins in the long term. The company’s long-term growth drivers include expansion of its global distribution model and venturing into under-penetrated markets. Coach is metamorphosing itself as a lifestyle brand. Moreover, the company has undertaken transformation initiatives revolving around products, stores and marketing.

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Coach currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Better-ranked stocks include Gildan Activewear Inc. GIL, sporting a Zacks Rank #1 (Strong Buy), G-III Apparel Group, Ltd. GIII and Lululemon Athletica Inc. LULU, both carrying a Zacks Rank #2 (Buy).


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Zacks Investment Research