Coach 2002 Annual Report Download - page 5

Table of Contents
PART I
Item 1. Business of Coach, Inc.
OVERVIEW
Coach is a designer, producer and marketer of high-quality, modern American classic accessories. Coach believes that it is one of the best
recognized leather goods brands in the U.S. and is enjoying increased recognition in targeted international markets. Net sales were
$953.2 million in the year ended June 28, 2003 (“fiscal 2003”), $719.4 million in the year ended June 29, 2002 (“fiscal 2002”) and
$600.5 million in the year ended June 30, 2001, (“fiscal 2001”). Operating income was $243.8 million in fiscal 2003, $133.6 million in fiscal
2002 and $101.7 million in fiscal 2001. Coach’s primary product offerings include handbags, women’s and men’s accessories, business
cases, weekend and travel accessories, leather outerwear, gloves, hats, scarves and personal planning products. Together with its licensing
partners, Coach also offers watches, footwear and home and office furniture with the Coach brand name. Coach’s products are sold through
a number of direct to consumer channels, which at the end of fiscal 2003 included:
• 156 United States retail stores;
• direct mail catalogs;
• on-line store; and
• 76 United States factory stores.
Coach’s direct-to-consumer business represented approximately 59% of its total sales in fiscal 2003. Its remaining sales were generated
from products sold through a number of indirect channels, which at the end of fiscal 2003 included:
• approximately 1,400 department store and specialty retailer locations in the U.S.;
• 107 international department store, retail store and duty free shop locations in 18 countries;
• 93 retail and department locations operated by Coach Japan, Inc.; and
• corporate sales programs.
Over the last several years, Coach has successfully transformed itself from a manufacturer of classic leather products, to a marketer of
more modern, fashionable handbags and accessories, using a broader range of fabrics and materials. Today, Coach’s updated styles and
multiple product categories address an increasing portion of its consumer’s accessory wardrobe, responding to its customer’s demands for
both fashion and function. Along with the rejuvenation of the product line, Coach has created a similarly modern environment to showcase
its product assortments and reinforce a consistent brand position. Finally, Coach has established a flexible, cost-effective manufacturing
model in which independent manufacturers supply most of its products which allows Coach to bring its broader range of products to market
more rapidly and efficiently.
Coach has developed a number of key differentiating elements that set it apart from the competitive landscape including:
• A Distinctive Brand — Coach believes that it is one of America’s leading accessible luxury accessories brand offering an aspirational
product that is relevant, extremely well made, and provides exceptional value.
• A Market Leadership Position with Growing Share — Coach is America’s leading accessories brand and each year, as its 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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