Yours Truly Posted June 25, 2014 Share Posted June 25, 2014 I think coach devalued their brand. I see too many teenaged girls wearing their products and that hurts it because adult women won't buy something they see teenagers wearing. I asked my girlfriend about coach and that is exactly what she said. She would never buy their products. So once their products become uncool with teenagers, who do they sell to? Aren't fashion fads made cool by celebrities, musicians, gay/lesbian community and teenagers? Link to comment Share on other sites More sharing options...
karthikpm Posted June 25, 2014 Share Posted June 25, 2014 Bought COH earlier with the same thesis as Wedgewood. I think they are still a good steward of (shareholder) capital. Fashion is fickle, and turnarounds are rare - but I am not convinced that this is the melting ice cube . They will have to rebuild the brand , but I still think you get paid to wait [ as of now, they state they are continuing dividend and buy back despite a projected drop in sales] Link to comment Share on other sites More sharing options...
boilermaker75 Posted July 2, 2014 Author Share Posted July 2, 2014 Over 27,000 July 36-strike call options opened today. Edit: In 1999 I owned CLFY. I noticed some unusually large call option volume. Shortly after was the announcement that NT was purchasing CLFY. The CEO and founder of CLFY is a friend of mine. I asked him about this. He said the feds came in and questioned them trying to find a connection between the call purchasers and someone at CLFY. They never found the source. Link to comment Share on other sites More sharing options...
gary17 Posted July 2, 2014 Share Posted July 2, 2014 Coach is competing in this entry luxury market... tough business.... Kate spade and Michael kor are the two other brands of similar prices. If coach can establish itself as a premium brand at the same price points there may be hope. Retail is not my game... Link to comment Share on other sites More sharing options...
gary17 Posted July 2, 2014 Share Posted July 2, 2014 Also tory burch Link to comment Share on other sites More sharing options...
portfolio14 Posted July 4, 2014 Share Posted July 4, 2014 I'll be interested in the book. Anyone remembers the title? I may be offbase here but wasn't louis vuitton a tired old brand at one point before marc jacobs - leading to a 15 year (still ongoing) resurgence? I thought there was a book or article on it- but a google search comes up with nothing.., Or maybe it was gucci with Tom Ford - regardless it is probably as difficult to bet on fashion turnaround as it is to bet on business turnarounds... Link to comment Share on other sites More sharing options...
gary17 Posted July 4, 2014 Share Posted July 4, 2014 How is LV = Coach? that's like saying a Lambo = Mustang ? .... anyway, no offence to anyone ..... Coach discounts their bags heavily in outlet stores - I just went to their stores in Seattle Premium Outlet and Woodburn in Portland OR -- bags at $400 -->> $200 then you get another 50% discount on top of that. LV (almost) never discount their products... The above says nothing about the business; but is quite telling of the brand power. Link to comment Share on other sites More sharing options...
bmichaud Posted July 4, 2014 Share Posted July 4, 2014 I don't see how COH's problems are contained to an "excisable cancerous area". North America has moved on from the brand, thus the cancer has spread to virtually every part of the body. Perhaps what's left of the healthy organs can be donated to shareholders - such as COH Japan and the real estate. Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted July 4, 2014 Share Posted July 4, 2014 How is LV = Coach? that's like saying a Lambo = Mustang ? .... anyway, no offence to anyone ..... Coach discounts their bags heavily in outlet stores - I just went to their stores in Seattle Premium Outlet and Woodburn in Portland OR -- bags at $400 -->> $200 then you get another 50% discount on top of that. LV (almost) never discount their products... The above says nothing about the business; but is quite telling of the brand power. Eh, the comparison is not meant to be direct. Fashion is fickle - lead designer's like Tom Ford and Marc Jacobs can totally revitalize a brand. Think of it like how ridiculous it would be to compare Lambo to Ferrari - when Lambo was making tractors. Link to comment Share on other sites More sharing options...
HJ Posted July 4, 2014 Share Posted July 4, 2014 I'll be interested in the book. Anyone remembers the title? I may be offbase here but wasn't louis vuitton a tired old brand at one point before marc jacobs - leading to a 15 year (still ongoing) resurgence? I thought there was a book or article on it- but a google search comes up with nothing.., Or maybe it was gucci with Tom Ford - regardless it is probably as difficult to bet on fashion turnaround as it is to bet on business turnarounds... http://www.amazon.com/Deluxe-How-Luxury-Lost-Luster/dp/0143113704/ref=sr_1_1?s=books&ie=UTF8&qid=1404512746&sr=1-1&keywords=deluxe+how+luxury+lost+its+luster Here's one book on the business, not entirely complementary to the industry, and not sure if that's what the previous poster had in mind. I think the evolution of these brands is quite unpredictable, and often times interacts with cultural / economic backdrop in ways that are not obvious at the time they are occurring, and could also be entirely coincidental. It's difficult if not impossible to figure out how a brand would evolve ahead of time. Link to comment Share on other sites More sharing options...
jouni1 Posted July 5, 2014 Share Posted July 5, 2014 How is LV = Coach? that's like saying a Lambo = Mustang ? .... anyway, no offence to anyone ..... Coach discounts their bags heavily in outlet stores - I just went to their stores in Seattle Premium Outlet and Woodburn in Portland OR -- bags at $400 -->> $200 then you get another 50% discount on top of that. LV (almost) never discount their products... The above says nothing about the business; but is quite telling of the brand power. Eh, the comparison is not meant to be direct. Fashion is fickle - lead designer's like Tom Ford and Marc Jacobs can totally revitalize a brand. Think of it like how ridiculous it would be to compare Lambo to Ferrari - when Lambo was making tractors. why would you compare a tractor company to ferrari? lamborghini trattori still makes tractors. Link to comment Share on other sites More sharing options...
jouni1 Posted July 5, 2014 Share Posted July 5, 2014 and designers like tom ford and slimane etc have really resurrected "forgotten" brands. slimane is at SLP now and ford has his own house. i'm not sure coach can attract that kind of talent. it has 0 heritage, is american and sells 300 dollar hand bags at half price. their best hope is to get bought out by LVMH or kering. but if i was a french fashion billionaire i wouldn't even glance at them. Link to comment Share on other sites More sharing options...
Haasje Posted July 5, 2014 Share Posted July 5, 2014 These brand turnarounds often surprise me too. It's probably something that is more likely to happen with a heritage brand like a LV but I see it with discount and mid-market brands as well. Sometimes it is caused by them getting a better product (value proposition) in front of consumers and sometimes it happens on the back of an Ad campaign that resonates with consumers. I just have no idea how to put a frequency on a turnaround like that and how much time it would take? So I would treat that as an option and see how the business is doing, as is. Link to comment Share on other sites More sharing options...
Palantir Posted July 5, 2014 Share Posted July 5, 2014 I think focusing on the fickleness of fashion isn't the right way of looking at it. COH pretty much voluntarily damaged their brand here with the outlet stores. Sure I think they can turn it around, but I don't see the right indications from management, and the guy who was in charge of this strategy is still the chairman. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 5, 2014 Share Posted July 5, 2014 I think focusing on the fickleness of fashion isn't the right way of looking at it. COH pretty much voluntarily damaged their brand here with the outlet stores. Sure I think they can turn it around, but I don't see the right indications from management, and the guy who was in charge of this strategy is still the chairman. Lew Frankfort built the company. When Sara Lee acquired Coach in 1985, he was appointed President. In 1995, he became chairman and CEO. In 2014 he was officially succeeded by Luis Victor. If Frankfort remained CEO, I would be pretty bullish on Coach. Right now I'm shorting Coach because Victor isn't the same calibre as Frankfort... look at the same-store sales and how he has replaced almost everybody at the top. Link to comment Share on other sites More sharing options...
Palantir Posted July 5, 2014 Share Posted July 5, 2014 I think focusing on the fickleness of fashion isn't the right way of looking at it. COH pretty much voluntarily damaged their brand here with the outlet stores. Sure I think they can turn it around, but I don't see the right indications from management, and the guy who was in charge of this strategy is still the chairman. Lew Frankfort built the company. When Sara Lee acquired Coach in 1985, he was appointed President. In 1995, he became chairman and CEO. In 2014 he was officially succeeded by Luis Victor. If Frankfort remained CEO, I would be pretty bullish on Coach. Right now I'm shorting Coach because Victor isn't the same calibre as Frankfort... look at the same-store sales and how he has replaced almost everybody at the top. How do you know he is not the same caliber? Why are you rating a CEO on one quarter of performance? Frankfort is the creator of this strategy, it is failing, and he needs to go. The fact he was successful in the past is irrelevant going forward. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 5, 2014 Share Posted July 5, 2014 Coach announced its succession plan on Feb. 14, 2013. I suspect that Luis Victor started running the show then, because same store sales suddenly started to decline and management started changing. Let's look at the factory (outlet) store count: 1999 - 62 2000- 63 2001- 68 2002- 74 2003- 76 2004- 76 2005- 82 2006- 86 2007- 93 2008- 102 2009- 111 2010- 121 2011- 143 2012- 169 2013- 193 If the outlet store strategy is a bad strategy, why did it do so well for so long? Link to comment Share on other sites More sharing options...
Palantir Posted July 5, 2014 Share Posted July 5, 2014 "I suspect" is not very convincing about Luis's abilities, given that Frankfort is staying on as the Chairman, it is more likely that he still wields a lot of influence. Why did it work better then? Because Coach's brand was more desirable then, now their brand is less so as they have stronger competitors in their core "affordable luxury" market. As a result they have to depend on the outlets to make up sales, which cheapens the brand further. Link to comment Share on other sites More sharing options...
HJ Posted July 6, 2014 Share Posted July 6, 2014 Not that this has anything to do with Coach, but here's an interesting read on how the brands under Gap evolved over time, in the view of the authors. http://www.cengage.com/management/webtutor/ireland3e/cases/gap.pdf Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted July 10, 2014 Share Posted July 10, 2014 How is LV = Coach? that's like saying a Lambo = Mustang ? .... anyway, no offence to anyone ..... Coach discounts their bags heavily in outlet stores - I just went to their stores in Seattle Premium Outlet and Woodburn in Portland OR -- bags at $400 -->> $200 then you get another 50% discount on top of that. LV (almost) never discount their products... The above says nothing about the business; but is quite telling of the brand power. Eh, the comparison is not meant to be direct. Fashion is fickle - lead designer's like Tom Ford and Marc Jacobs can totally revitalize a brand. Think of it like how ridiculous it would be to compare Lambo to Ferrari - when Lambo was making tractors. why would you compare a tractor company to ferrari? lamborghini trattori still makes tractors. Coach makes bags and leather accessories currently. Pre-Marc Jacobs LV had roughly the same product mix. LV wasn't a fashion house in the sense that you think of Prada, Burberry, Hermes- Marc Jacobs introduced ready-to-wear during his stint as creative director. I was playing loose with the analogy. Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted July 10, 2014 Share Posted July 10, 2014 and designers like tom ford and slimane etc have really resurrected "forgotten" brands. slimane is at SLP now and ford has his own house. i'm not sure coach can attract that kind of talent. it has 0 heritage, is american and sells 300 dollar hand bags at half price. their best hope is to get bought out by LVMH or kering. but if i was a french fashion billionaire i wouldn't even glance at them. I don't think the heritage aspect has much to do with with it as both Tom Ford and Marc Jacobs worked at Perry Ellis (contemporaneously, no less) before resurrecting a heritage brand (Gucci and LV respectively). The up and coming designers are more likely to go in looking to make a name for themselves a la Ford/Jacobs. I don't think they get bought out- too down market... I have no position or intention of establishing a position unless it falls much further... Link to comment Share on other sites More sharing options...
jouni1 Posted July 10, 2014 Share Posted July 10, 2014 yes, they could get lucky and get a visionary at the helm. i don't think it's worth betting on though. perry ellis was way before my time :D guess they made a name for themselves, not so much for pery? Link to comment Share on other sites More sharing options...
gary17 Posted July 10, 2014 Share Posted July 10, 2014 If getting this visionary means the stock is up 10% the next day, but the business prospect changes fundamentally... then all else being equal wouldn't it make more sense to buy after the 10% appreciation? I mean it'd make sense to pay for improved odds... Link to comment Share on other sites More sharing options...
jouni1 Posted July 10, 2014 Share Posted July 10, 2014 the point is they can't get someone who's skills are already recognized. they have stuart vevers already but it remains to be seen if he's the one the need. the returns or losses will come in slow if there isn't a buyout i think. i don't see anybody buying COH though Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted July 10, 2014 Share Posted July 10, 2014 If getting this visionary means the stock is up 10% the next day, but the business prospect changes fundamentally... then all else being equal wouldn't it make more sense to buy after the 10% appreciation? I mean it'd make sense to pay for improved odds... Largely what Jouni said, They won't get "Marc Jacobs" or "Tom Ford." It won't be obvious - maybe something to watch out for is if they start doing Ready-to-wear apparel. Coach is also amazingly popular amongst Mainland Chinese consumers. or someone who use to work in some capacity for Ralph Lauren - I think most of the visionaries have some tie to Ralph Lauren... Link to comment Share on other sites More sharing options...
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