Coach 2008 Annual Report Download - page 7

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TABLE OF CONTENTS
accessories with the latest fashion directions in sunglasses. Coach sunglasses are sold in Coach retail stores, department stores, select
sunglass retailers and optical retailers in major markets.
Travel Bags — The travel collections are comprised of luggage and related accessories, such as travel kits and valet trays.
Fragrance — Coach, in partnership with Beauty Bank, a division of Estee Lauder, Inc. offers two fragrances. The collections include
a perfume spray, purse spray, perfume solid, shimmer powder, body lotion and lip gloss. Coach fragrances are sold exclusively in Coach
stores and coach.com.
Watches — Movado Group, Inc. (“Movado”) has been Coach’s watch licensee since 1998 and has developed a distinctive collection of
watches inspired primarily by the women’s collections with select men’s styles.
Design and Merchandising
Coach’s New York-based design team, led by its Executive Creative Director, is responsible for conceptualizing and directing the design
of all Coach products. Designers have access to Coach’s extensive archives of product designs created over the past nearly 70 years, which
are a valuable resource for new product concepts. Coach designers are also supported by a strong merchandising team that analyzes sales,
market trends and consumer preferences to identify business opportunities that help guide each season’s design process. Merchandisers also
analyze products and edit, add and delete to achieve profitable sales across all channels. The product category teams, each comprised of
design, merchandising/product development and sourcing specialists, help Coach execute design concepts that are consistent with the
brand’s strategic direction.
During fiscal 2008, the Company announced a new business initiative, formerly referred to as Collection, to drive brand creativity.
This initiative has evolved into a brand of its own, Reed Krakoff, and is supported by a new team of designers and merchandisers and will
encompass all women’s categories, with a focus on ready-to-wear, handbags, women’s accessories, footwear and jewelry. Reed Krakoff, as
a stand alone brand separate from the Coach brand, will target the true luxury market. We expect to introduce the Reed Krakoff brand in
fiscal year 2011.
Coach’s design and merchandising teams work in close collaboration with all of our licensing partners to ensure that the licensed
products (watches, footwear and eyewear) are conceptualized and designed to address the intended market opportunity and convey the
distinctive perspective and lifestyle associated with the Coach brand.
Segments
Coach operates in two reportable segments: Direct-to-Consumer and Indirect. The reportable segments represent channels of distribution
that offer similar products, service and marketing strategies.
Direct-to-Consumer Segment
The Direct-to-Consumer segment consists of channels that provide us with immediate, controlled access to consumers: Coach-operated
stores in North America, Japan, Hong Kong, Macau and mainland China, the Internet and the Coach catalog. This segment represented
approximately 84% of Coach’s total net sales in fiscal 2009, with North American stores, Coach Japan, the Internet and Coach China
contributing approximately 61%, 21%, 2% and 1% of total net sales, respectively.
North American Retail Stores — Coach stores are located in regional shopping centers and metropolitan areas throughout the U.S.
and Canada. The retail stores carry an assortment of products depending on their size and location. Our flagship stores, which offer the
broadest assortment of Coach products, are located in high-visibility locations such as New York, Chicago, San Francisco and Toronto.
Our stores are sophisticated, sleek, modern and inviting. They showcase the world of Coach and enhance the shopping experience while
reinforcing the image of the Coach brand. The modern store design creates a distinctive environment to display our products. Store
associates are trained to maintain high standards of visual presentation, merchandising and customer service. The result is a complete
statement of the Coach modern American style at the retail level.
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