Coach 2008 Annual Report Download - page 10

TABLE OF CONTENTS
productivity in this channel by opening larger image-enhancing locations, expanding existing stores and closing smaller, less productive
stores. Coach’s most significant international wholesale customers are the DFS Group, Lotte Group, Shinsegae International, Shilla Group
and Tasa Meng Corp.
The following table shows the number of international wholesale locations at which Coach products are sold:
Fiscal Year Ended
June 27,
2009
June 28,
2008
June 30,
2007
International freestanding stores 44 37 25
International department store locations 81 83 74
Other international locations 34 23 25
Total international wholesale locations 159 143(1) 124(1)
(1) Excludes 24 and 16 stores in fiscal 2008 and fiscal 2007, respectively, that were part of the retail businesses operated by the ImagineX
group in Hong Kong, Macau and mainland China.
Licensing — In our licensing relationships, Coach takes an active role in the design process and controls the marketing and
distribution of products under the Coach brand. The current licensing relationships as of June 27, 2009 are as follows:
Category Licensing
Partner
Introduction
Date
Territory License
Expiration
Date
Watches Movado Spring ‘98 Worldwide 2015
Footwear Jimlar Spring ‘99 U.S. 2014
Eyewear Marchon Fall ‘03 Worldwide 2011
Products made under license are, in most cases, sold through all of the channels discussed above and, with Coach’s approval, these
licensees have the right to distribute Coach brand products selectively through several other channels: shoes in department store shoe salons,
watches in selected jewelry stores and eyewear in selected optical retailers. These venues provide additional, yet controlled, exposure of the
Coach brand. Coach’s licensing partners pay royalties to Coach on their net sales of Coach branded products. However, such royalties are
not material to the Coach business as they currently comprise less than 1% of Coach’s total revenues. The licensing agreements generally
give Coach the right to terminate the license if specified sales targets are not achieved.
Marketing
Coach’s marketing strategy is to deliver a consistent message each time the consumer comes in contact with the Coach brand through
our communications and visual merchandising. The Coach image is created internally and executed by the creative marketing, visual
merchandising and public relations teams. Coach also has a sophisticated consumer and market research capability, which helps us assess
consumer attitudes and trends and gauge the likelihood of a product’s success in the marketplace prior to its introduction.
In conjunction with promoting a consistent global image, Coach uses its extensive customer database and consumer knowledge to target
specific products and communications to specific consumers to efficiently stimulate sales across all distribution channels.
Coach engages in several consumer communication initiatives, including direct marketing activities and national, regional and local
advertising. In fiscal 2009, consumer contacts increased 14% to over 164 million. However, the Company continues to leverage marketing
expenses by refining our marketing programs to increase productivity and optimize distribution. Total expenses related to consumer
communications in fiscal 2009 were $50 million, representing less than 2% of net sales.
Coach’s wide range of direct marketing activities includes email contacts, catalogs and brochures targeted to promote sales to consumers
in their preferred shopping venue. In addition to building brand awareness, the
6