Coach 2012 Annual Report Download - page 10

Indirect Segment
Coach began as a U.S. wholesaler to department stores and this segment remains a part of our overall
consumer reach. Today, we work closely with our partners, both domestic and international, to ensure a clear
and consistent product presentation. The Indirect segment represented approximately 11% of total net sales in
fiscal 2012, with U.S. Wholesale and Coach International representing approximately 6% and 4% of total net
sales, respectively. The Indirect segment also includes royalties earned on licensed product.
U.S. Wholesale — This channel offers access to Coach products to consumers who prefer shopping at
department stores. Coach enhances presentation, within the department store environment, primarily through
the creation of more shop-in-shops with proprietary Coach fixtures. Coach custom tailors its assortments
through wholesale product planning and allocation processes to better match the attributes of our department
store consumers in each local market. Coach products are also available on macys.com, dillards.com,
bloomingdales.com, lordandtaylor.com, belk.com, vonmaur.com and nordstrom.com. While overall U.S.
department store sales have slowed over the last few years, the handbag and accessories category has
remained strong. The Company continues to closely manage inventories in this channel given the highly
promotional environment at point-of-sale.
Coach’s products are sold in approximately 990 wholesale locations in the U.S. and Canada. Our most
significant U.S. wholesale customers are Macy’s (including Bloomingdale’s), Dillard’s, Nordstrom, Lord &
Taylor, Carson’s, the Bay and Saks Fifth Avenue.
Coach International — This channel represents sales to international wholesale distributors and
authorized retailers. Travel retail represents the largest portion of our customers’ sales in this channel.
However, we continue to drive growth by expanding our distribution to reach local consumers in emerging
markets. Coach has developed relationships with a select group of distributors who sell Coach products
through department stores and freestanding retail locations in over 20 countries. Coach’s current network of
international distributors serves the following domestic and/or travel retail markets: South Korea, US &
Territories, Taiwan, Malaysia, Hong Kong, Mexico, Saudi Arabia, Thailand, Japan, Australia, Singapore, UAE,
France, China, Macau, Indonesia, Kuwait, Bahamas, Aruba, Vietnam, New Zealand, Bahrain, India and Brazil.
For locations not in freestanding stores, Coach has created shop-in-shops and other image enhancing
environments to increase brand appeal and stimulate growth. Coach continues to improve 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, Shinsegae
International, Tasa Meng Corp, Lotte Group and Shilla Group.
In connection with the fiscal 2011 agreement with the Valiram Group, the Company assumed direct
control of its domestic retail business in Malaysia in July 2012. Additionally, in connection with the fiscal
2012 agreement with Shinsegae International, the Company assumed direct control of its retail business in
Korea in early August 2012.
In fiscal 2013, the Company will be expanding further into Latin America through distributor partners to
customers in Venezuela, Colombia, Panama and Peru.
The following table shows the number of international wholesale locations at which Coach products are
sold:
Fiscal Year Ended
June 30, 2012 July 2, 2011 July 3, 2010
International freestanding stores ................ 77 61 53
International department store locations ........... 87 109 93
Other international locations ................... 41 41 36
Total international wholesale locations ............ 205 211 182
7