Coach 2006 Annual Report Download - page 3

In this Form 10-K, references to “Coach,” “we,” “our,” “us” and the “Company” refer to Coach, Inc., including consolidated
subsidiaries. The fiscal years ended June 30, 2007 (“fiscal 2007”), July 1, 2006 (“fiscal 2006”) and July 2, 2005 (“fiscal 2005”)
were each 52-week periods. The fiscal year ending June 28, 2008 (“fiscal 2008”) will also be a 52-week period.
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Founded in 1941, Coach was acquired by Sara Lee Corporation (“Sara Lee”) in 1985. In June 2000, Coach was incorporated in the
state of Maryland. In October 2000, Coach was listed on the New York Stock Exchange and sold approximately 68 million shares of
common stock, split adjusted, representing 19.5% of the outstanding shares. In April 2001, Sara Lee completed a distribution of its
remaining ownership in Coach via an exchange offer, which allowed Sara Lee stockholders to tender Sara Lee common stock for Coach
common stock.
In June 2001, Coach Japan, Inc. (“Coach Japan”) was formed to expand our presence in the Japanese market and to exercise greater
control over our brand in that country. Coach Japan was initially formed as a joint venture with Sumitomo Corporation. On July 1, 2005,
we purchased Sumitomo’s 50% interest in Coach Japan, resulting in Coach Japan becoming a 100% owned subsidiary of Coach, Inc.
In March 2007, the Company exited its corporate accounts business in order to better control the location and image of the brand where
Coach product is sold. Through the corporate accounts business, Coach sold products primarily to distributors for gift-giving and incentive
programs. The results of the corporate accounts business, previously included in the Indirect segment, have been segregated from continuing
operations and reported as discontinued operations in the Consolidated Statements of Income for all periods presented.
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Segment information is presented in Note 13 to the Consolidated Financial Statements.
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Coach has grown from a family-run workshop in a Manhattan loft to a leading American marketer of fine accessories and gifts for
women and men. Coach is one of the most recognized fine accessories brands in the U.S. and in targeted international markets. We offer
premium lifestyle accessories to a loyal and rapidly growing customer base and provide consumers with fresh, relevant and innovative
products that are extremely well made, at an attractive price. Coach’s modern, fashionable handbags and accessories use a broad range of
high quality fabrics and materials. In response to our customer’s demands for both fashion and function, Coach offers updated styles and
multiple product categories which address an increasing portion of our customer’s accessory wardrobe. Coach has created a sophisticated,
modern and inviting environment to showcase our product assortment and reinforce a consistent brand position wherever the consumer may
shop. Finally, we utilize a flexible, cost-effective global sourcing model, in which independent manufacturers supply our products, allowing
us to bring our broad range of products to market rapidly and efficiently.
Coach offers a number of key differentiating elements that set it apart from the competition, including:
A Distinctive Brand — Coach offers distinctive, easily recognizable, accessible luxury products that are relevant, extremely well made
and provide excellent value.
A Market Leadership Position With Growing Share — Coach is America’s leading premium handbag and accessories brand and
each year, as our market share increases, our leadership position strengthens.
Coach’s Loyal And Involved Consumer — Coach consumers have a specific emotional connection with the brand. Part of the
Company’s everyday mission is to cultivate consumer relationships by strengthening this emotional connection.
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Multi-Channel International Distribution — This allows Coach to maintain a critical balance as results do not depend solely on the
performance of a single channel or geographic area. The Direct-to-Consumer channel provides us with immediate, controlled access to
consumers through Coach-owned stores in North America and Japan, the Internet and the Coach catalog. The Indirect channel provides
us with access to consumers via U.S. and international wholesale locations.
Coach Is Innovative And Consumer-Centric — Coach listens to its consumer through rigorous consumer research and strong
consumer orientation. Coach works to anticipate the consumer’s changing needs by keeping the product assortment fresh and relevant.
We believe that these differentiating elements have enabled the Company to offer a unique proposition to the marketplace. We hold the
number one position within the U.S. premium handbag and accessories market and the number two position within the Japanese imported
luxury handbag and accessories market.
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Coach’s product offerings include handbags, women’s and men’s accessories, footwear, outerwear, business cases, sunwear, watches,
travel bags, jewelry and fragrance. The following table shows the percent of net sales that each product category represented:
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