IW 50 Best: Coach to Expand Throughout Europe

April 26, 2010
Globalization efforts continue while profit rises 37% in third quarter.

Bolstered by aggressive cost-cutting measures and strong sales in China, leather-goods manufacturer Coach Inc. plans to expand throughout Europe and open its first China flagship store.

Profit rose 37% in the quarter to $158 million, the company said on April 20. Revenue rose 12% to $830.7 million.

Comparable store sales grew at a double-digit rate in China where "business is trending" about a year ahead of the company's original plan, said Chairman and CEO Lew Frankfort in a statement. The company expects about $250 million in sales during fiscal 2012. The company's first mainland China store opens this week in Shanghai.

Coach partly credits cost-cutting initiatives undertaken in 2009 for the better-than-expected results. "Our growth demonstrates our ability to manage our business nimbly, while investing prudently for the future," Frankfort says. "We're accelerating our distribution plans to leverage the emerging market opportunity with a particular focus on China, while also exploring new geographies capitalizing on the increasing popularity and recognition of the brand with discerning consumers globally."

The company cut approximately 150 positions from its corporate offices, closed several retail stores and cut prices on handbags by 12%.

Coach Inc.
At A Glance

Coach Inc.
New York, N.Y.
Primary Industry: Apparel
Number of Employees: 12,000
2008 In Review
Revenue: $3.18 billion
Profit Margin: 24.62%
Sales Turnover: 1.40
Inventory Turnover: 2.43
Revenue Growth: 21.75%
Return On Assets: 31.97%
Return On Equity: 41.00%

In Europe, Coach has entered into an agreement with French department store Printemps to open at least 14 locations in Printemps stores throughout France over the next three years. The first will be a 1,700-square-foot shop in Printemps' flagship Haussmann Boulevard store in Paris in June.

The company also has reached an agreement with British retailer Hackett Ltd. to open Coach stores in the U.K., Spain, Portugal and Ireland. Frankfort said he expects the first locations in the U.K. and Spain to open over the next 12 months.

"We're confident that the Coach proposition of New York fashion and accessible luxury will resonate with the stylish European consumer, as it has throughout North America, Asia and the Middle East," Frankfort said.

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About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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