Coach 2010 Annual Report Download - page 25

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TABLE OF CONTENTS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of Coach’s financial condition and results of operations should be read together with Coach’s financial
statements and notes to those statements included elsewhere in this document. When used herein, the terms “Coach,” “Company,”
“we,” “us” and “our” refer to Coach, Inc., including consolidated subsidiaries.
EXECUTIVE OVERVIEW
Coach is a leading American marketer of fine accessories and gifts for women and men. Our product offerings include women’s and
men’s bags, accessories, business cases, footwear, wearables, jewelry, sunwear, travel bags, watches and fragrance. Coach operates in two
segments: Direct-to-Consumer and Indirect. The Direct-to-Consumer segment includes sales to consumers through Company-operated stores
in North America, Japan, Hong Kong, Macau and mainland China, the Internet and Coach catalog. The Indirect segment includes sales to
wholesale customers and distributors in over 20 countries, including the United States, and royalties earned on licensed product. As
Coach’s business model is based on multi-channel international distribution, our success does not depend solely on the performance of a
single channel or geographic area.
In order to sustain growth within our global framework, we continue to focus on two key growth strategies: increased global
distribution, with an emphasis on North America and China, and improved store sales productivity. To that end we are focused on five key
initiatives:
•Build market share in North America’s accessories market in part by growing our North American retail store base by opening
stores in new markets and adding stores in under-penetrated existing markets. We believe that North America can support about 500
retail stores in total, including up to 30 in Canada. We expect to open about 15 net new retail stores and 25 factory outlets in fiscal
2012. The pace of our future retail store openings will depend upon the economic environment and will reflect opportunities in the
marketplace. In addition, as part of our culture of innovation and continuous improvement, we have implemented a number of
initiatives to accelerate the level of newness, elevate our product offering and enhance the in-store experience. These initiatives will
enable us to maximize productivity and continue to leverage our leadership position in the market.
•Raise brand awareness and build market share in markets in which Coach is under-penetrated, most notably in Asia, where China
is our largest geographic opportunity as our brand awareness is increasing and the category is developing rapidly. We currently plan
to open about 30 new locations in mainland China during fiscal 2012. Outside of Asia, we are developing the brand opportunity as
we expand into Europe and South America.
•Refocus on the Men’s opportunity for the brand, globally, drawing on our long heritage in the category, notably in North America
and Asia. We have implemented a number of initiatives to elevate our Men’s product offering through image-enhancing and
accessible locations. To this end, in fiscal 2012 our new store openings in North America and Japan will focus primarily on Men’s
factory and retail stores, while our new shops in China will be dual-gender locations. Specifically, we expect about half our North
American retail store openings to be Men’s locations and about 15 Men’s-only factory stores.
•Continue to expand market share with the Japanese consumer, driving growth in Japan primarily by opening new retail locations.
We believe that Japan can support about 180 retail locations in total. We currently plan to open approximately 15 net new locations
during fiscal 2012.
•Raise brand awareness and build market share through our digital strategy, coach.com, our global e-commerce sites, marketing sites
and social networking. The Company utilizes and continues to explore implementing new technologies such as our global web
presence, with 17 informational websites in 18 countries with e-commerce enabled in the United States, Canada and Japan, social
networking and blogs as cost-effective consumer communication opportunities to increase on-line and store sales.
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