Coach 2014 Annual Report Download - page 9

TABLE OF CONTENTS
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Licensing — In our worldwide licensing relationships, Coach takes an active role in the design process and controls the marketing and distribution of
products under the Coach brand. Licensing revenue of approximately $27.9 million and $32.1 million in fiscal 2014 and fiscal 2013, respectively, is
included Other sales. (Other, which is not a reportable segment, consists of sales generated in ancillary channels). The licensing relationships as of June 28,
2014 are as follows:
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   
Footwear Jimlar 1999 2015
Eyewear Luxottica 2012 2016
Watches Movado 1998 2015
Fragrance Estee Lauder 2010 2015
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 salons, watches in selected jewelry stores and
eyewear and sunwear 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 net sales. The licensing agreements generally give Coach the right to terminate the license if specified sales targets are
not achieved.
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Coach’s global marketing strategy is to deliver a consistent, relevant and multi-layered message every time the consumer comes in contact with the
Coach brand through our communications and visual merchandising. The Coach image is created and executed by our 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.
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. Total
expenses related to consumer communications in fiscal 2014 were $130.1 million, approximately 3% of net sales.
Coach’s wide range of direct marketing activities includes email contacts and catalogs targeted to promote sales to consumers in their preferred shopping
venue. In addition to building brand awareness, the Company's website serves as an effective brand communication vehicle by providing a showcase
environment where consumers can browse through a strategic offering of the latest styles and colors, which drives store traffic and enables the collection of
customer data.
As part of Coach's direct marketing strategy, the Company uses its database primarily consisting of approximately 24 million households in North
America and 10 million households in Asia. Email contacts and direct mail pieces are Coach's principal means of communication and are sent to selected
households to stimulate consumer purchases and build brand awareness. The growing number of visitors to the Company's e-commerce sites in the U.S.,
Canada, Japan and China provides an opportunity to increase the size of these databases.
In fiscal 2014, Coach had informational websites in Australia, Bahrain, Brazil, Chile, Colombia, France, Hong Kong, Indonesia, Ireland, South Korea,
Kuwait, Malaysia, Mexico, Panama, Peru, Portugal, Saudi Arabia, Singapore, Spain, Taiwan, Thailand, UAE, United Kingdom, Venezuela and Vietnam. In
addition, the Company utilizes and continues to explore new technologies such as blogs and social networking websites, including Twitter, Facebook,
Instagram, Pinterest, WeChat and Sina Weibo, as a cost effective consumer communication opportunity to increase on-line and store sales, acquire new
customers and build brand awareness.
The Company also runs national, regional and local marketing campaigns in support of its major selling seasons. In fiscal 2014, the Company refreshed
its strategy to expand its marketing campaigns to more clearly message its brand and products under an effortless New York style positioning. We plan to
continue to support this strategy in the future through an increased presence in relevant fashion, media events and publications.
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