Coach Outnumbers the Competition; Michael Kors and Tiffany Take a Backseat
Fashionable consumers love a designer bag, wallet or even a keychain at a somewhat affordable price. Products that are costly enough to show that the shopper spent the dough for the brand name, but not so expensive that it depletes the house payment savings, are key in this recession. This comfortable area between high and working class is where Coach Inc. (NYSE: COH) has found its niche, and may as well taunt its competitors to “follow the leader”.
While much of Coach's competition remains privately held, such as Dooney & Bourke, Inc. and Kate Spade LLC, some do trade publicly as well. For instance, Michael Kors Holdings Ltd. (NYSE: KORS). Much of the general public holds Michael Kors' brand in the same regard as Coach in terms of luxury, yet Kors is trading approximately $40 down from Coach.
Fortunately for Coach, it doesn't stop there. Just ask Tiffany & Co. (NYSE: TIF). The well-known brand that most notably sells jewelry, dishware and home décor, is currently exposed to the European market. Coach is not. According to Bloomberg, Coach's absence in this sector has been aiding their efforts in the retail world while simultaneously damaging Tiffany's.
“Tiffany fell the most in more than three years on Jan. 10 after reducing its annual earnings forecast because of slowing sales in Europe, where the sovereign debt crisis prompted consumers to curb spending,” Bloomberg.com reported.
The numbers don't lie. Currently, Tiffany & Co. is down 3.11% YTD, while Coach and Michael Kors are both up 21.06% and 18.25% YTD, respectively.
Coach also steamrolls the competition in number of shares. KORS' 190.79M and TIF's 126.96M go up against COH's 291.83M daily.
Throughout the holiday season and the first few weeks of 2012, Coach has continued to perform well. Though times have been tough in the U.S. in recent years, Coach's numbers are assuring a previously floundering industry that there is still hope for the rich to spend.
“Coach's revenues increased 15%, with an 18% increase in earnings. These numbers came on direct-to-consumer sales increases of 17% and U.S. comp sales of 8.8%. These numbers are what every retailer dreams of, and Coach must be ecstatic because of the specific demographic it targets,” investorplace.com reported.
Beyond singular earnings, Coach's success could quite possibly foreshadow the comeback of many businesses and retailers who got lost in the recession-muck that is still being schlepped up across the country today.
“On a grander scale, think about what else rich people might be buying. If they can afford totally unnecessary things like accessories, it might mean luxury travel is next. Indeed, hotel revenue and occupancy is on the upswing,” investorplace.com contributor Lawrence Meyers said. “These trends also might bode well for folks with expensive boats. The boating sector has been totally hammered during the past few years, but it might be the time to start hunting for value among players like MarineMax (NYSE: HZO) and West Marine (NASDAQ: WMAR).”
As Coach continues to power through an unforgiving economy, one thing is for sure; the trends it has set are suggesting a more-than-likely return from the recession, and that is something that everyone can look forward to.
Coach Inc. is currently trading at $72.19, Tiffany & Co. is currently trading at $64.24 and Michael Kors [USA] is currently trading at $32.99.
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