Ticker Talk: Coach (COH)

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Photo by DvYang
One of the first 'luxury' brands to pop up on my radar as a teenager was Coach. I remember its established presence on the pages of Teen Vogue and its heritage-oriented ads, as well as its renowned logo and "C" pattern. For my thirteenth birthday I insisted my father take me to Dillard's to purchase a hot pink suede and canvas logo shoulder bag which I carried proudly into high school. Every time I received a gift in their then-trademark brown box I would get giddy with excitement. The sentiment still stands today, with Valentine's day around the corner I expect there will be many ladies giddy with excitement at the sight of their cream boxes. 

But perhaps not as many as Valentine's days of the past; the brand has taken a bit of a fall on the stock market recently, and greeted February with disappointing numbers. Sales declined during the holidays, and with Michael Kors (KORS) making headlines with stellar numbers, investors are spooked and the stock is slipping. 

After the brand made its debut on the New York Stock Exchange (NYSE) on October 5, 2000 at $16 Coach was on its way to leading the market until the crash of 2008. As the market recovered, so did the company until 2012 where it fell slightly and then plateaued. Hovering at about $48 today, its taken a fairly intense tumble from recent highs around $55, and its all-time high of about $79 in March.

I'd like to think of this brand as a good opportunity to "buy low and sell high." I believe Coach is well-established in its industry and will improve performance over time. It may take several years, but I'm confident they have the business sense and resources to make it happen. It's almost impossible to talk about affordable luxury or leather goods without including Coach in the conversation and I don't believe that is going to change anytime soon. 

The brand has recently announced plans to transform itself into a "lifestyle brand," signaling a shift in focus from leather goods and handbags to clothing and footwear. This could very well be the reason it takes several years for Coach to get back to the top of their game, but Rome wasn't built in a day, right? 

Keep an eye on this security, it will be interesting to see where the transformation to a lifestyle brand will lead and how it will affect their product offering. Coach is traded on both the NYSE (COH) and the Hong Kong Stock Exchange (SEHK: 6388). 

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