Coach taps Chinese opportunity

25 October 2012

BEIJING: Coach, the luxury brand, is attempting to enhance its retail network, target male shoppers and move into ecommerce in China, reflecting the vast possibilities offered by the country.

The company logged 40% growth in China in the last quarter, with organic returns seeing double-digit gains. During its current fiscal year, Coach expects to yield $400m in sales from the country.

Lew Frankfort, the chairman and chief executive of Coach, told analysts that the organisation is building strong bonds with buyers, promising local and international benefits.

He said: "The Chinese consumer has embraced Coach as evidenced by these results as well as the increasing contribution of the Chinese tourists to our global sales in the extremely high purchase [and] repurchase intent among existing consumers."

The firm takes a 17% value share of the imported accessories segment in Japan, making it the second largest player in this sector. Frankfort argued it would be similarly ambitious in China.

"We do believe as the market develops, Coach is particularly well positioned for the emerging middle class in China," he continued. "They still have over a 90% repurchase intent."

Coach unveiled eight new stores during the last quarter, including seven on the mainland and one in Hong Kong. This total now stands at 104 stores in Greater China, of which 86 are on the mainland.

To further such momentum, Coach intends to add 30 extra outlets in 2012. Square footage will also grow by around 35%.

"All of these openings are planned to be dual-gender stores due to the size of the Men's opportunity," said Frankfort.

Elsewhere, Frankfort revealed that the firm hopes to launch an ecommerce portal next month, thus "providing Chinese consumers a new way to engage with the Coach brand."

At the product level, its Madison range has proved to be a success in China, while the Legacy line is becoming a "second pillar", and proving especially popular with existing customers.

Data sourced from Seeking Alpha; additional content by Warc staff