Coach is America's biggest homegrown luxury accessories brand, positioned as the US equivalent to LVMH's Louis Vuitton or Hermes. Although best-known for women's handbags, it has also established a presence in other accessory segments including footwear, scarves, watches and fragrances, mainly through licensees (including Luxottica and Inter Parfums). Goods are sold through upscale third-party outlets as well as the company's own global network of around 1,500 directly owned stores, primarily in North America and Asia, with a much smaller footprint in Europe. The group wrestled for several years with challenging conditions, prompting the appointment of new creative director Stuart Vevers and a shift towards a multi-brand strategy. Long-time leader Lew Frankfort ceded the role of CEO at the end of 2013 to Victor Luis. Performance finally began to turn around in 2015; that year the group acquired luxury shoemaker Stuart Weitzman. Rumours began to circulate in 2016 that Coach might seek to merge with another similar sort of fashion group, with Burberry among the potential partners, but a deal was agreed the following year to acquire fellow New Yorker Kate Spade & Co instead for $2.4bn. To reflect the company's growing stable of brands, it changed its corporate name to Tapestry Inc towards the end of 2017. For the year ending June 2019, group revenues topped $6.0bn for the first time, with net profit of $643m. The Coach brand contributed topline of $4.3bn, and more than 90% of operating profit. Kate Spade's revenues were $1.4bn, but has been struggling with declining performance. Stuart Weitzman added $389m. CEO Victor Luis left the group abruptly in Sep 2019 in the wake of sharp declines in Tapestry's share price triggered mainly by the weakness of the Kate Spade brand. He was replaced on an interim basis by chairman Jide Zeitlin. Coach was originally founded in 1941 as Gail Leather Products, a family-run workshop. It was bought out by manager Miles Cahn in 1961, the year after he had introduced the Coach brandname for a line of cowhide purses. The Cahn family built up the business before selling it in 1985 to diversified conglomerate Sara Lee Corporation. They funded a dramatic expansion of the business both in the US and international. Coach was spun off as an independent company in 2001.
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Capsule checked 15th August 2019
Adbrands Weekly Update 7th Jun 2018: Tragically, celebrated accessories designer Kate Spade took her own life this week, after suffering for some time with chronic depression. She was 55. She no longer had any connection to her eponymous design label, which she and her business partner and husband Andy Spade sold to Neiman Marcus in 2006 for a total of almost $100m. Soon after it was acquired by what was then Liz Claiborne Inc, which itself subsequently changed its name to Kate Spade & Co. That business was acquired by Coach in 2017 for $2.4bn. Spade herself returned to the fashion business in 2016 under the brand Frances Valentine, but had been unable to repeat her past successes.
Adbrands Weekly Update 12th October 2017: US luxury leather goods group Coach is adopting a new name to reflect its evolution into a multi-brand company following the acquisitions of Stuart Weitzman and Kate Spade. The corporate entity announced plans to adopt the new name Tapestry Inc from the end of this month. "It's a wonderful metaphor for what we believe in, which is individual threads of different colours all working together to create a picture," said CEO Victor Luiz.
Adbrands Weekly Update 11th May 2017: Coach took a big step towards establishing itself as a major multi-brand luxury group with a deal to acquire US accessories rival Kate Spade & Co for $2.4bn in cash. Coach also already owns footwear brand Stuart Weitzman. Coach and Kate Spade have been in talks for several months, but there were fears last month that a potential deal might be derailed by the news that two other accessories brands - Jimmy Choo and Bally - were also up for sale. However, those two businesses presented arguably a less comfortable fit for Coach than fellow New Yorker Kate Spade. Coach CEO Victor Luis told WWD "We've been very specific in our language about creating the first New York-based house of modern, luxury-based brands. For us, that’s an important reflection of the values in our home city - a city that is inclusive, home to immigrants and a part of our founding. New York is a city that believes anything is possible." Other deals may follow, though not for a while. "Coach, Stuart Weitzman and Kate Spade are born American," said Luis, "and while they were born in New York, we don't see our future limited by that." Kate Spade is expected to retain brand independence under its current CEO Craig Leavitt.
Adbrands Weekly Update 8th Dec 2016: UK luxury brand Burberry has rejected a succession of takeover offers from its US rival Coach, which is seeking to evolve into a multi-brand group. No details have been disclosed of the offers, but it's reported that talks have ended and are unlikely to resume. Burberry's current market value is a little over £6bn while Coach is trading around $10bn.
Adbrands Weekly Update 8th Jan 2015: US luxury group Coach expanded its profile with the acquisition of luxury shoe designer Stuart Weitzman for $574m, close to twice that company's annual sales. Despite the general buoyancy of the luxe market, Coach has been wrestling with steady declines in performance for the past couple of years, with core customers transferring allegiance to continental rivals or to up-and-coming domestic competitors like Kate Spade and Michael Kors. One solution could be to adopt a multi-brand format along similar lines to Gucci Group or LVMH. Coach has been a single-brand business since the departure of designer Reed Krakoff in 2013. Stuart Weitzman was previously part of Jones Group, the fashion conglomerate broken up by private equity investors last year. However analysts were largely sceptical about the sense of this deal. In a note to investors, Wells Fargo's Paul Lejuez concluded Weitzman "would be a nice tuck-in acquisition for a company that was on its feet, [but it is] not a saviour for a brand that is struggling."
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