updated 12 Oct 2011, 10:20
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Mon, May 23, 2011
The Business Times
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The men start getting it again at Coach
by Felda Chay

LUXURY lifestyle handbag and accessory maker Coach Inc can hardly be considered a masculine brand. After all, when executive creative director Reed Krakoff took over in 1996, he proposed to turn the American name into one that focused on the three Fs: fun, feminine, fashionable.

But the group may now be dropping the feminine tag as it attempts to rebuild the men's business that it left in a dark corner of its display shelves some time between the late 1990s and early 2000s.

"You probably know us as more of a women's brand, and we have been a very successful women's brand. But we started off, 70 years ago, as a men's brand," shared Andre Cohen, the label's president and chief executive of Asia.

In the last decade or so, however, the flourishing women's department overshadowed the men's, pushing the brand to align itself more closely with its feminine side.

"But consumers kept coming back and telling us, 'why aren't you doing more for men? The old briefcase I have is 10 years old and I love it, but I want something new now'," said Mr Cohen.

So in the past year, Coach has focused on building up its men's business - a segment that it says accounts for 15 per cent of the global luxury market, and 25 per cent of Asia's luxe business.

It has already built five men's stores in Japan, and is expanding its men's business in China - where males make up some 50 per cent of luxury spending in the country.

Coach's renewed interest in men will be felt in Singapore, where its store at Paragon shopping mall, which carries an assortment of its men's line, will have a separate shop entrance designed to suit the clientele; men, after all, would feel more comfortable walking into a store that doesn't have a display clearly geared towards the fairer sex.

The group - which will take over direct control of its retail businesses in Singapore and Malaysia from distributor Valiram Group through a phased transition starting in July - hopes to significantly grow its business over the next few years, but declined to provide sales targets. Currently, the two countries generate annual retail sales of about US$50 million.

According to Mr Cohen, taking direct control of its stores is something that it is moving towards over the longer term. Coach currently has direct control of its stores in the US, Japan and China.

In Asia, for instance, Coach has set up an entity called Coach Asia that's focused on the region outside of China and Japan, and it is in the process of identifying markets that the group wants to run directly.

Still, it believes that distributors have a key role to play in the business.

"We've got strong partnerships with many distributors and we still see a role for distributors," said Mr Cohen. For example, while Coach will soon take control of its Singapore stores, Valiram will continue to run the brand's shops at the airport.

"We still see a role and we value those partnerships, but where it makes sense to Coach, we will get more involved in running markets directly."

Working with distributors is also important in markets that Coach is not familiar with, said Mr Cohen. "Some markets may also be too small for us to run directly."

Earlier in May, Coach announced its intent to pursue a dual listing of its shares on the Hong Kong Stock Exchange, in addition to its current listing on the New York Stock Exchange.

The move comes as the brand seeks to further expand in China - its fastest growing market.

The brand doubled its sales in fiscal year 2010 to over US$100 million in the country, and said that it was on track to generate sales of about US$185 million for its fiscal year 2011, up from its estimate of US$175 million previously.

Coach is targeting a 10 per cent market share in China - which is projected to be a US$5 billion market - over the next three years. This translates into sales of US$500 million a year by FY2014.

Its current market share is 5 per cent, said Mr Cohen. "We are looking to add 30 new locations per year in China, and these can be flagship, standalone retail stores, shop-in-shops, and department stores and factory stores," he said.

For the third quarter ended April 2, Coach said sales jumped 14 per cent year-on-year to US$950.7 million.

Profit was US$186 million, or 62 US cents a share, up from US$157.6 million, or 50 US cents, a year earlier. Currently, North America makes up about 70 per cent of the company's sales.

This article was first published in The Business Times.

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