RawGreed Requests, COH, Coach Inc.

Posted on November 28, 2005 , filed under Stocks | Print This Post

Rupal A. writes

I was wondering if you had any ideas on Coach (COH)?

COH, Coach Inc., seems to be doing quite well. I like the fact that Coach has diversified over the years into non leather goods. For the past 14 quarters, same store sales have had double digit growth and the company is expecting the trend to continue. Coach generates over 30% of its annual profit during holiday sales. I expect that the company’s 2005 holiday sales will be strong. I also like the fact that Coach is expanding its presence in Japan through a joint venture. Japan has a near insatiable demand for luxury goods. If Coach can compete successfully in Japan with Louis Vuitton, Burberry and other luxury manufacturers of leather good and handbags, the company will have a bright future in the country. The risk to any luxury goods company is that they are highly vulnerable to changes in fashion and trends. If holiday sales are positive, in the short term, 6 months-1year, I see little risk in investing in COH. COH has experienced steady growth over the past 5 years. I believe the trend should continue in the short run. The price of COH may temporarily take a dip if negative economic indicators such as employment rates increase or retails sales figures for other luxury leather goods manufacturer’s drop. If a dip occurs, I would look at that as an opportunity to purchase COH.

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