Coach Targets European Luxury Demand with London Flagship Store
Source : Mydaily.co.uk
Coach has opened its first European flagship store in London as part of its international push. The store located at 41 New Bond street was opened on September 7th to mark the 70th anniversary of the company. Coach is a leading American marketer of luxury lifestyle handbags and other fashion accessories and competes with premium apparel and accessories players like Polo Ralph Lauren’s (NYSE:RL), Liz Claiborne (NYSE:LIZ) and AnnTaylor (NYSE:ANN).
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We have a $58.50 price estimate for Coach stock, which is roughly 10% above the current market price.
International Expansion is Central to Coach’s Strategy
With the mature luxury market in U.S., Coach is looking to expand its portfolio internationally. The company is following its major competitor Polo Ralph Lauren, which has posted strong results based on its sizable international operations.
Just to highlight the importance of their London flagship store, Coach has created the “41 Collection” that features three exclusive styles available at the store, each paying homage to a London neighborhood. The company will also be running a New York-themed advertising campaign which will be part of a large-scale global launch with integrated print and outdoor advertising. We expect Coach’s European operations to grow significantly as it plans to open additional stores within the next three years.
Coach Counts on Affordable Luxury to Enhance European Operations
Value for money, rather than price has become the determining factor for luxury consumers in the current economic downturn. With its bigger European presence, Coach is counting on providing the consumers with an option of affordable luxury. For instance the average price of a Coach handbag is about $325 compared to about $2,000 for a Louis Vuitton handbag and more than $1,000 for other handbags like Gucci and Prada. These create a strong aspirational pull that the Coach brand also commands while appealing to a broader audience.
Although Coach is a affordable luxury retailer, the London flagship store will feature the Madison, Chelsea and Hamptons line of luxury handbags in addition to the “41 Collection”. These are high end range of handbags that will hopefully improve profit margins that have been under pressure lately. This is contrary to the U.S. operations where the company is promoting the Poppy line of handbags, which constitute the lower end of Coach’s handbags range carrying lower margins.