Coach2017 Big Adjustment.Reform Fashion Luxury Acquisition Can Not Stop

- Jan 15, 2018 -

The luxury group Coach, which took years to regain its strength, may not be the same in 2017.

According to foreign media reports, the $ 1.8 billion cash holding company is constantly looking for bidding bags, shoes, accessories and other brands, in the past few months, came out with the company "gossip" The brands include Buberry, Kate spade and Jimmy Choo, which came out just last week for sale.

Although these mergers and acquisitions news is only market rumors, but it is not groundless.

Coach began to adjust the company's leadership structure early this year, it is not difficult to see that this company wants to transform into a multi-brand group's ambition.

The reporter noticed that CFO Kevin G.Wills, appointed by the company in January this year, had held senior positions in international business consulting firms and was responsible for capital restructuring and mergers and acquisitions. In February, he once again announced the addition of a president of Global Business Development and Strategic Alliances Positioned by Ian Bickley, president of Coach Brands International, Bickley is responsible for strategic cross-brand collaboration with the new appointment; in April, the company once again announced the addition of President and Chief Executive Officer to its Coach brand, Newly appointed Joshua Schulman has previously been Jimmy Choo's CEO for 5 years.

Affected by these news, Coach shares soared 10.48% on Tuesday. The company also released its third fiscal quarter results for the year ended April 1, 2017. Although sales revenue edged down 4% to 995 million US dollars, but profits higher than the market expected.

"Our strategic vision for the brand and the company remains clear and clear, despite the uncertain retail environment," concludes Coach Group CEO Victor Luis at the performance meeting. "With the new leadership architecture, Coach, Inc. has Ready, committed to continuing to grow into a global multi-brand company. "

Yuda International Brand Investment Management Co., Ltd. President Yang Dayun that the acquisition of the global fashion industry has been the entire industry in the development process of the "main theme" in the traditional fashion industry recognized by the market as a long process, but also in the fashion industry Really be able to become "mainstream" consumer brands "rare." This is an easy-to-access area, but it is a foothold industry. The more mature the market, the fewer brands consumers need to choose. The direct point is: "This industry does not need too many brands."

"Fashion is coming and going," said Erwan Rambourg, a global luxury market analyst at HSBC. "A diversified brand strategy in this industry means less volatility and more consistency. risk."

Four years ago, the American company, founded in 1941, paid the price for the brand's rapid growth over the past decade and the company's performance declined continuously. In the year of 2014, the company's share price has fallen by 40%. People are no longer queuing up at Coach's store to wait for the next hot handbag, and the market's share of the brand's history has been eaten by newcomers such as Michael Kors and Kate Spade.

After realizing the crisis, Victor Luis resorted to big moves and announced a package of adjustment tactics at the June 2014 investor conference. According to the plan, Coach will gradually close the dilution of the brand value of the factory shop, reduce product discounts and at the same time increase the pricing of new fashion supplies, and update the store concept, a new positioning of the marketing.

The company tried to reverse the sales downturn by reshaping the brand store image and regain market share taken away by competitors. However, the middle process is difficult and has a slow response. However, fortunately, the company's decline to gradually improve in 2016, the momentum of development has also picked up.

The internal reform continues. Reporter noted that, in order to avoid discounting their own brand dilution, the company continued to adjust the wholesale channels, withdraw from more than 200 department stores in North America. The latest three quarterly reports said the future will continue to reduce sales and shut down about 25% of North American wholesale channels. This undoubtedly will affect this year's performance, the company forecast sales this year will show a low single-digit growth.

However, there are also market views that, Coach has been trying to improve their brand premium, so that shoppers pay higher prices and not easy to achieve. At least in the United States is this. Erwan Rambour pointed out that the United States is a country with a great value for money culture and that it is a problem if people are allowed to buy things in the full extent of this discounted culture.

Coach's exploration of mergers and acquisitions is seen as helping to further expand its sales and profits, at least under the group if multiple brands can drive growth.

Although Coach is a novice to the M & A community, it is not inexperienced in this respect. Stuart Weitzman, another shoe brand owned by the company, was acquired in 2015. For the brand, Victor Luis previously said in an interview that the acquisition of Stuart Weitzman is an exclusive opportunity to enter the footwear market as the company sees a $ 27 billion global footwear launch.

Coach said Stuart Weitzman is gradually attracting millennial consumers and expects brand sales to double-digit growth in the fourth quarter and year-round.

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