Analysis of Accessories and Gifts Manufacturing Industry: Coach, Inc. Company Introduction Coach Inc. was founded in 1941 as a household based leather handbag manufacturing workshop in Manhattan, New York City. The reputation of Coach-made leather handbags steadily grew during the preceding years owing to the excellence in product design, quality, function and durability…
It is now recognized as a leading luxury goods producer in America with the brand image affordable luxury. The company’s current product line consists of Coach Handbags, Accessories, Wearables, Footwear, Jewelry, Sunwear, Travel Bags, Watches and Fragrance (Coach). Market Size Currently Coach Inc. is recognized as a large, profitable and growing American manufacturer of accessories and gifts for men and women. It owns approximately a 30% market share of the accessories and gifts manufacturing industry in the world. Coach Inc. has a significant influence on the accessories and gifts manufacturing industry in America. Net income and gross profit of the company amounted 353 million and 1.09 billion dollars respectively as at the end quarter of 2012 (Wikiinvest). Moreover, Coach Inc. employed approximately 18,000 people on a full and part time basis as of June 30, 2012 (Coach). Market Growth Rate Coach sales marked a sharp drop during January 2013. The company’s sales dropped by 2% in markets located in North America. North America is considered the largest market location of Coach Inc. It is listed as one of the largest companies in the S&P 500 stock market index. In January 2013, Coach Inc. was the largest declining company in the S&P 500 list. The company also failed to achieve the sales targets set for the same month (Cheng). Nevertheless, the company management is optimistic about the future sales because the yearly performance in 2012 recorded positive growth. During 2012, the price of the company shares rose by 20.9%; net sales increased by 14.5% to $4.76 billion, direct-to-consumer sales rose by 16.1% to $4.23 billion, comparable sales in Coach’s North American stores increased by 6.6%. Moreover, Coach opened 9 new retail stores and 26 new factory stores and brought the total number of retail and factory stores to 354 and 169, respectively, in North America. Another 10 factory stores were also expanded. Coach China opened 30 stores in new locations, bringing the total number of locations to 96. Coach Japan opened 11 new locations, bringing the total number of locations to 180 towards the end of 2012. Thus at this stage, it is impossible to determine whether the Coach Inc. market is declining or growing (Cheng). Score of Competitive Rivalry The company’s products are sold in over 20 countries in the world including North America, Japan, Hong Kong, Macau, China, Taiwan, and Singapore. Coach products are directly sold to the customers via company-operated stores in these countries. Direct-to-consumer is the prominent marketing strategy of Coach Inc. The company is also engaged in indirect marketing, i.e., sales to wholesale customers, distributors, licensed firms and web based marketing. For Coach Inc., the world is the market. Thus, the opportunity for obtaining the benefits of economies of scale is a major advantage for Coach Inc. However, it also faces issues relating to trading across borders such as loss in fair value, earnings or cash flows arising from adverse changes in interest rates or foreign currency exchange rates. The company’s policy focuses on reinvesting the profits earned abroad in the same country. Furthermore, Coach Inc.’ Annual Report 2012 reveals that the company uses the following distinguished marketing strategies to remain its annual sales revenues: (1) Distinctive Brand: Coach offers distinctive, easily ...
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