kirkomi Posted August 20, 2014 Share Posted August 20, 2014 Some gems here. http://www.beyondproxy.com/coach-bad/ At the end of May 2014 we decided to sell the shares. Coach had just posted its second quarter in a row of year-over-year declining sales growth. Reports showed that its major competitor, Michael Kors, was taking market share. We sold our shares at $41.08 for a 16.6 percent loss. Based on the fact that the shares have fallen another 16 percent from our sale price, in hindsight the sale was a wise decision. and this. Note: If Coach’s business was to stabilize, we would consider repurchasing the shares—especially if they traded in the high $20 range—at a 50 percent discount from our estimated intrinsic value. His only reason for a sale seems to be declining revenue. He also "notes" that he will buy again if the revenue stabilizes. What happened to riding out the short term business volatility ? What we liked about the company was its consistent operating margins (just over 30 percent), its high triple digit cash return on invested capital and consistent growth in intrinsic value. We felt the company had a brand and as a result, relatively low business risk. At the time of purchase, the company also had zero debt and $859 million of cash on hand. This resulted in the company having no balance sheet risk. Lastly, we felt given the large difference between our purchase price of $49.27 on March 26, 2013, and our estimated intrinsic value of $72.90, we felt the company had a nice margin of safety and low valuation risk. $72.9 seems to be too precise to be correct. Nevermind that the balance sheet is still strong. I am not interested in buying Coach but this whole article read really amateurish. I just hope that he has a better idea of what he is doing then he lets on. Link to comment Share on other sites More sharing options...
cubsfan Posted August 20, 2014 Share Posted August 20, 2014 Maybe he is not giving all the reasons for the sale. I realize I'm giving him some leeway here. It looks like COH would be in for a tough period, given the investor day presentation where they talk about the large reinvestment needs to turn around the store. So he might just be protecting owner's capital, more of a portfolio decision in the short term. But if his estimate of intrinsic value did not change, then it looks a little wishy washy. I guess I would have expected him to say his estimate of intrinsic value was reduced significantly and that triggered a sale. Probably could have much worded it better if that was the case. But in their defense - the LT investing record looks pretty good. http://www.granitevaluecapital.com/GoverningPrinciples.html Link to comment Share on other sites More sharing options...
zizou Posted September 21, 2014 Share Posted September 21, 2014 Earlier this month, I was invited to get an in-store (NYC 17th and 5th Ave location) preview of the new designer's fall line. I took my girlfriend along to get a woman's perspective. There were models dressed in the line and walking around modeling the outfits and bags. A lot of the outfits were supposedly inspired by the movie "Shining"; sales clerks suggested that some pieces were already pre-ordered and selling very well eg. the Apollo sweater ~695$. My girlfriend liked some bags, didn't really feel the outfits were practical for her. Many items seemed like statement pieces, which aren't really street wear. What do i know?! Overall, the men's section seemed to be made up of traditional high quality leather bags, jackets, etc. Some new boots and such were part of the new collection; all look great! The sales staff were well trained, very friendly and courteous. Looking around, a number of guests seemed to like the collection. This may be a solid start to the new Coach strategy.. We'll just have to wait and see how the new collection does. For now, I feel comfortable starting a position in Coach shares especially the recent leg down in the stock price. I believe they can keep margins steady with a growing international business; also the men's market will only grow. I do notice more and more men carry Coach weekenders.. Over the 5 years, I expect North America will become smaller contributor to revenues compared to aspiring Asian and South American consumers. Also Europe is only starting out... There is a runway here.. I will make this a 4% position and hold for at least 3 years Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted September 23, 2014 Share Posted September 23, 2014 I just stumbled across this old SEC filing: http://www.sec.gov/Archives/edgar/data/1116132/000115752313001726/a50606832.htm On April 10, 2013, affiliates of Coach, Inc. (the “Company”), The Related Companies, L.P. (“Related”) and Oxford Properties Group, Inc. (“Oxford”) entered into the agreements below relating to the development and acquisition of the Company’s new global corporate headquarters in a new office building to be located at the Hudson Yards development site on the northwest corner of West 30th Street and 10th Avenue in New York City (the “New Headquarters”). Construction of the new building has commenced and occupancy in the New Headquarters is currently expected to take place in 2015. The New Headquarters will occupy approximately 738,000 square feet of the approximately 1.7 million total square feet for the new building, and the Company will own a condominium interest with respect to the New Headquarters upon substantial completion of the new building. The Company also has various options to purchase or lease up to an additional approximately 135,000 square feet in the new building. The aggregate cost of the New Headquarters, including, but not limited to, land costs, development fees, build-out fees and transaction expenses, is expected to be approximately $750 million over the next three years, with $160 million of investment projected in FY2013. The estimated $160 million of investment includes $30 million of capital that has been included in the $250 million of previously disclosed, estimated capital expenditures for FY2013. The New Headquarters will be financed by the Company with cash on hand, borrowings under its credit facility and proceeds from the sale of its current headquarters building. Their old HQ was sold for $130M. They are spending $750M ish on the new one. (The latest 10-K suggests that the final cost might be lower.) The price/sqft is around $1000/sqft. In my opinion, shareholders do not want to be in the business of owning real estate that costs $1000/sqft. And they certainly should not consume their own supply. The rental/leasing costs of that office space will be expensive. Link to comment Share on other sites More sharing options...
CorpRaider Posted September 23, 2014 Share Posted September 23, 2014 Yeah, but they're not planning to fund it out of cash flow any more, or at least that was an option discussed when pressed on the last CC. Looks like an asset a PE shop could sell or lever up... Link to comment Share on other sites More sharing options...
Palantir Posted September 23, 2014 Share Posted September 23, 2014 ^Now that you mention PE, Coach might be a good buyout target now. I can totally see a firm like Golden Gate or w/e trying to turn this around. Link to comment Share on other sites More sharing options...
justinbaka Posted November 13, 2014 Share Posted November 13, 2014 Just some scuttlebutt perspective from someone in Asia. Been to many Coach stores in the region (esp, HongKong, Singapore and Malaysia), the stores are usually packed. Seems like the dilution of the brand in the US hasn't reach the shores of Asia yet and there's still growth and room for expansion in Asia. Though the younger generation seemed more excited about brands like Michael Kors and Kate Spade. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 25, 2015 Share Posted February 25, 2015 Starting to get some analyst upgrades. Topeka Capital "broke the seal" last week and today Oppenheimer upgraded to buy with $50 price target today based on traffic trends in stores and outlets and the impressions of the new collection. I note this only as potentially reflecting an inflection in analyst sentiment. Also, priced some (cheap) unsecured debt. Link to comment Share on other sites More sharing options...
CorpRaider Posted April 7, 2016 Share Posted April 7, 2016 Nomura upgrade to $50, stock has been performing well, business decent...starting to look like it might work out pretty well. Man everything seems to take a lot longer to play out than one might expect. I always have to remind myself to sloooow down. Link to comment Share on other sites More sharing options...
boilermaker75 Posted August 1, 2016 Author Share Posted August 1, 2016 After I started this thread, my daughter was looking for a purse. I asked my daughter about coach. She said she was not interested in Coach bags. This was someone who had previously purchased Coach bags and had given me a Coach belt. I know she has purchased a couple of bags since then, Gucci and Rag and Bone. Fast forward to today. I am visiting my daughter and yesterday she wanted to go to the Coach store to look at purses at The Grove in LA. The store was very busy with people leaving with purchases. There were at least 6 staff working including two Asian women who were kept busy with Chinese customers with whom they were conversing in Chinese. Link to comment Share on other sites More sharing options...
CorpRaider Posted August 2, 2016 Share Posted August 2, 2016 Yeah, but they're not planning to fund it out of cash flow any more, or at least that was an option discussed when pressed on the last CC. Looks like an asset a PE shop could sell or lever up... Looks like they are going to do it on their own. I would take a 1% fee for the idea. ;D Selling HQ for $700MM and leasing back for 20 years. Booking $30MM gain, amortized over that period. I'm probably going to lighten up ~$50. Has worked pretty nicely for me so far but admittedly had to average down a few times and got a pretty heavy allocation (for a peon retail investor). Better than a Stuart Weitzman stem in the eye... Interesting to run a chart versus KORS from around 06/2014; some people were talking about a pair trade then, guess they maybe blew up/out. Link to comment Share on other sites More sharing options...
boilermaker75 Posted October 21, 2016 Author Share Posted October 21, 2016 http://www.bloomberg.com/news/articles/2016-10-21/burberry-shares-gain-after-report-coach-is-considering-merger?cmpid=yhoo.headline&yptr=yahoo Link to comment Share on other sites More sharing options...
boilermaker75 Posted May 2, 2017 Author Share Posted May 2, 2017 https://finance.yahoo.com/news/coachs-quarterly-profit-beats-fewer-110832161.html Link to comment Share on other sites More sharing options...
DooDiligence Posted May 2, 2017 Share Posted May 2, 2017 They should start shredding old stock like Louis Vuitton (except do it loud & shriek exclusivity even if it's BS...) Link to comment Share on other sites More sharing options...
boilermaker75 Posted May 8, 2017 Author Share Posted May 8, 2017 COH acquiring KATE, https://finance.yahoo.com/news/coach-snags-handbag-rival-kate-113140607.html Link to comment Share on other sites More sharing options...
LC Posted March 17, 2018 Share Posted March 17, 2018 Just FYI these guys changed their name to Tapestry Inc. I was in a Coach store today and one of the salespeople told me Coach replaced their head of design and went back to their previous standard of craftsmanship (all leather etc.). Time will tell if it is true and works, but she did say that the new head of design won the designer of the year last year. Link to comment Share on other sites More sharing options...
CorpRaider Posted March 17, 2018 Share Posted March 17, 2018 I sold 1/3 at $52. I had like an 20% CAGR on one lot, but I got lucky timing that purchase. Only running a CAGR of about 13% on the rest, to date. I could have just bought some VOO and headed to the gym. Link to comment Share on other sites More sharing options...
CorpRaider Posted April 26, 2018 Share Posted April 26, 2018 Pushing like a 15+% CAGR now. Mission accomplished? I think I'm going to let it ride. Does anyone have that chart going around fintwit a few days ago showing the gross margin and inventory turns for various retail outfits, with TPR kind of at leading edge of those two metrics? I thought I bookmarked it, but apparently not. Link to comment Share on other sites More sharing options...
DooDiligence Posted April 27, 2018 Share Posted April 27, 2018 Pushing like a 15+% CAGR now. Mission accomplished? I think I'm going to let it ride. Does anyone have that chart going around fintwit a few days ago showing the gross margin and inventory turns for various retail outfits, with TPR kind of at leading edge of those two metrics? I thought I bookmarked it, but apparently not. --- edit: this may not be what you meant. Link to comment Share on other sites More sharing options...
CorpRaider Posted April 27, 2018 Share Posted April 27, 2018 That's it. Thanks! Link to comment Share on other sites More sharing options...
rkbabang Posted June 5, 2018 Share Posted June 5, 2018 "New York fashion designer Kate Spade has been found dead in her apartment in an apparent suicide" Link to comment Share on other sites More sharing options...
CorpRaider Posted June 5, 2018 Share Posted June 5, 2018 R.I.P. Link to comment Share on other sites More sharing options...
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