Coach's Handbags Division Is Stuffed With Value
For Coach Inc. ( COH ), handbags are its most important business, contributing close to 60% to its value. The retailer reaches its customers through company-operated retail & factory stores, wholesale distributors, freestanding stores and the internet. Coach typically releases three to four collections per quarter and four to seven styles per collection.
Coach’s handbags come an “affordable luxury” price point as they are significantly cheaper than other luxury brands such as Louis Vuitton, Gucci and Prada but still have strong brand recognition. Moreover, the retailer is responsive to changing fashion trends, provides an rich in store experience, good customer service and lifetime warranties. This makes Coach one of the strongest players in the handbags market.Despite the handbags large size relative to Coach’s other businesses, this division has been growing faster than other segments such as belts & wallets for the past 3 years.  We believe that handbags business will play a crucial role in driving Coach to $68.