Fashion

Could Coach Be The Next LVMH Or Kering?

By Donovan | May 5, 2017 0 Comments

(Above photo): Coach 1941 Fall 2017 at New York Fashion Week.

Does LVMH Moët Hennessy Louis Vuitton SE, better known as LVMH have some serious competition coming?

American multinational luxury fashion company Coach, Inc. could soon be the next LVMH or Kering.

According to Bloomberg, “Shares in the handbag and accessories maker jumped 12 percent Tuesday after it posted better-than expected earnings. But Coach’s long-term strength will depend on how well it executes on increasingly ambitious plans to join the ranks of the world’s biggest luxury fashion houses.”

“Coach has taken some short-term sales losses by pulling out of hundreds of department stores, closing poor-performing stores, and relying less on discounting. But it has gotten customers to pay full price for its goods again, and it has started to rebuild its image as true luxury player. Sales of goods priced higher than $400 made up more than 55 percent of Coach’s handbag sales in North America, up from 40 percent a year ago, the company said.”

“Coach has been able to successfully reduce discounting and move its customers toward buying pricier handbags.”

Coach now wants to transition into a sort of mini-conglomerate, along the lines of French multinational luxury goods conglomerate LVMH and Kering SA, French luxury goods holding company owner of Alexander McQueen, Balenciaga, Brioni, Gucci, Puma, Volcom, Saint Laurent Paris, and other luxury brands.

“It’s a promising idea for Coach shareholders, if it works,” says Bloomberg.

In January of 2o17, DM Fashion Book reported that Kate Spade New York is ups for grabs. We also mentioned that Coach and American fashion brand and designer Michael Kors are interested in purchasing the American fashion design house, which was founded by Kate Spade and Andy Spade in 1993 (see our original story here). Back then, the two companies’ broads were conversing the feasibility of going ahead with a bid. Two months later (March 2017), we reported that “Coach’s acquisition of Kate Spade could be announced soon (see it here).

Coach brought luxury goods company shoemaker Stuart Weitzman in January 2015 for more than $500 million in cash. Coach was said to also have explored purchasing New York-based brands Diane von Furstenberg and Rebecca Minkoff, the latter of which sold a minority stake to private equity firm TSG Consumer Partners in 2012. (Coach declined to comment.)

“Coach has also smartly reconfigured its corporate structure; it recently nabbed former Jimmy Choo PLC chief Joshua Schulman for the newly created role of Coach brand president, and promoted its international head, Ian Bickley, to lead global business development (corporate jargon for M&A).”