What To Expect From Coach In Q3 FY 2016?

Factors To Consider:

1) Dwindling Bottom-Line Performance

• EPS fell 31.2%, 32.1%, 47.1%, and 47.5% y-o-y in Q1-Q4 FY 2015.
• In FY 2016, this has improved to drops of 22.6% and 5.6% in Q1 and Q2.
• Foreign currency headwinds and cautious consumer spending continue to dampen outlook.

2) Transformation Initiatives

• Coach has undertaken a multi-year strategic plan to transform the brand and reinvigorate growth.
• Measures include capital improvement of stores, closure of underperforming stores, inventory realignment, incremental advertisement spending, and curtailment of promotional activities.
• Wide availability of its premium products had tarnished the brand image, making factory outlets its highest revenue generator.
• 65 stores remodeled to luxury store concept in Q2, contributing to an improvement in North American comps — a fall of 4.2%, as compared to a decline of 22% in Q2 FY 2015.

3) Recovery In Chinese Tourists In Europe And Japan

• A pick-up in Chinese demand was witnessed in Europe and Japan, with increased tourist inflows.
• This has offset the decline seen in Hong Kong and Macau.

Have more questions on Coach? See the links below:

• Is Coach’s Transformation Plan Working?
• What Is The Breakdown Of The Charges Associated With Coach’s Transformation Plan?
• What is Coach’s Revenue And EBITDA Breakdown?
• Coach: Year 2015 In Review
• How Has Coach’s Revenue And EBITDA Composition Changed In The Last 3 Years?
• Is The Men’s Segment Becoming Big Business For Coach?
• By What Percentage Did Coach’s Revenue & EBITDA Decline In The Last 3 Years?
• How Will Coach’s Revenue And EBITDA Change In The Next 3 Years?
• What Is Coach’s Fundamental Value Based On Expected 2016 Results?

Notes: