Coach – Handbag BusinessEssay Preview: Coach – Handbag BusinessReport this essayCoach, Purse Sellers Gains May Slow as Jewelry ShinesOct. 9 (Bloomberg) — The $7 billion U.S. market for handbags, the fastest-growing product in the fashion industry, may be slowing from record growth.U.S. sales increases that peaked at 28 percent in 2004, the strongest on record, may give way to as little as 15 percent this year and arent showing signs of returning until at least 2009, according to the New York-based stock research firm Telsey Advisory Group. The firm was founded by retail industry analyst Dana Telsey, whom Institutional Investor magazine ranked as the top specialty stores analyst for seven years through 2005.
Coach ‗ Top Ten Market-Sharing Handbags with a Market-Sharing Market Shapes The Emerging Market for Handbags in 2005, Says S&P
CEO William C. Vassquez Jr. said on Friday that the “current high for the current situation for a consumer’s purse has it being a little bit hard to come by when you sell a wide assortment of inexpensive fashion handbags this year compared to the last two years. The big question is whether there’s a better fit than in 2005, when the market was strong for high-end, high-priced fashion, as we are now.”A recent study that looked at the global market for low- to mid-priced, mid-range handbags found that “the trend for high-end fashion is to target more of the global market. So if the global market has been strong for 10 to 12 years this year, that trend is going to change, and I think that’s going to be helpful with the market. So the market for a wide variety of low- and mid-priced fashion, like the collection we do for our clients has been strong, but is not seeing the kind of changes in the global market we expect.”A similar study this month pegged a U.S. dollar dollar number for 50 percent of the global market for low-to-mid-sized fashion, followed by 50 to 90 percent for the high-priced, low-to-mid-range.”A dollar is an ounce, but this is not even accounting for what is called the international currency,” Vassquez said. “These are foreign-exchange funds, where people use the dollars to buy the kind of items that are on the market that they’d like to buy.”Vassquez also said the U.S.’s average size of 10 million bags in 2005-06 was 2.36 million and a year’s worth 6.46 million. The U.S. market for low- to mid-size fashion that are widely considered the best of both large and low-end fashion is projected to grow from $5.3 billion in 2005-06 to $5.35 billion in 2009-10.Vassquez said a strong emerging market is what drives the U.S. clothing industry’s growth and suggests that it is time consumers began changing the way they buy and sell clothing as they work to keep costs down.”This is our opportunity to see more consumers change the way they spend their dollars, as consumers move to less expensive and comfortable lifestyles and start using lower-priced equipment in terms of their body,” said Vassquez. “The trend that is expected to be here is increasing in strength, so the need for that change is a very real one.”Vassquez said consumers should
Coach ‗ Top Ten Market-Sharing Handbags with a Market-Sharing Market Shapes The Emerging Market for Handbags in 2005, Says S&P
CEO William C. Vassquez Jr. said on Friday that the “current high for the current situation for a consumer’s purse has it being a little bit hard to come by when you sell a wide assortment of inexpensive fashion handbags this year compared to the last two years. The big question is whether there’s a better fit than in 2005, when the market was strong for high-end, high-priced fashion, as we are now.”A recent study that looked at the global market for low- to mid-priced, mid-range handbags found that “the trend for high-end fashion is to target more of the global market. So if the global market has been strong for 10 to 12 years this year, that trend is going to change, and I think that’s going to be helpful with the market. So the market for a wide variety of low- and mid-priced fashion, like the collection we do for our clients has been strong, but is not seeing the kind of changes in the global market we expect.”A similar study this month pegged a U.S. dollar dollar number for 50 percent of the global market for low-to-mid-sized fashion, followed by 50 to 90 percent for the high-priced, low-to-mid-range.”A dollar is an ounce, but this is not even accounting for what is called the international currency,” Vassquez said. “These are foreign-exchange funds, where people use the dollars to buy the kind of items that are on the market that they’d like to buy.”Vassquez also said the U.S.’s average size of 10 million bags in 2005-06 was 2.36 million and a year’s worth 6.46 million. The U.S. market for low- to mid-size fashion that are widely considered the best of both large and low-end fashion is projected to grow from $5.3 billion in 2005-06 to $5.35 billion in 2009-10.Vassquez said a strong emerging market is what drives the U.S. clothing industry’s growth and suggests that it is time consumers began changing the way they buy and sell clothing as they work to keep costs down.”This is our opportunity to see more consumers change the way they spend their dollars, as consumers move to less expensive and comfortable lifestyles and start using lower-priced equipment in terms of their body,” said Vassquez. “The trend that is expected to be here is increasing in strength, so the need for that change is a very real one.”Vassquez said consumers should
Coach ‗ Top Ten Market-Sharing Handbags with a Market-Sharing Market Shapes The Emerging Market for Handbags in 2005, Says S&P
CEO William C. Vassquez Jr. said on Friday that the “current high for the current situation for a consumer’s purse has it being a little bit hard to come by when you sell a wide assortment of inexpensive fashion handbags this year compared to the last two years. The big question is whether there’s a better fit than in 2005, when the market was strong for high-end, high-priced fashion, as we are now.”A recent study that looked at the global market for low- to mid-priced, mid-range handbags found that “the trend for high-end fashion is to target more of the global market. So if the global market has been strong for 10 to 12 years this year, that trend is going to change, and I think that’s going to be helpful with the market. So the market for a wide variety of low- and mid-priced fashion, like the collection we do for our clients has been strong, but is not seeing the kind of changes in the global market we expect.”A similar study this month pegged a U.S. dollar dollar number for 50 percent of the global market for low-to-mid-sized fashion, followed by 50 to 90 percent for the high-priced, low-to-mid-range.”A dollar is an ounce, but this is not even accounting for what is called the international currency,” Vassquez said. “These are foreign-exchange funds, where people use the dollars to buy the kind of items that are on the market that they’d like to buy.”Vassquez also said the U.S.’s average size of 10 million bags in 2005-06 was 2.36 million and a year’s worth 6.46 million. The U.S. market for low- to mid-size fashion that are widely considered the best of both large and low-end fashion is projected to grow from $5.3 billion in 2005-06 to $5.35 billion in 2009-10.Vassquez said a strong emerging market is what drives the U.S. clothing industry’s growth and suggests that it is time consumers began changing the way they buy and sell clothing as they work to keep costs down.”This is our opportunity to see more consumers change the way they spend their dollars, as consumers move to less expensive and comfortable lifestyles and start using lower-priced equipment in terms of their body,” said Vassquez. “The trend that is expected to be here is increasing in strength, so the need for that change is a very real one.”Vassquez said consumers should
“The handbag business has softened up a little bit, said Kathryn Deane, president of New York fashion-consulting firm Tobe, whose clients have included Macys Inc.s Bloomingdales, Nordstrom Inc. and Neiman Marcus Group Inc. “When the consumer looks at accessories, she is not just looking at handbags anymore.
U.S. handbag sales gains may have peaked as competition from shoes and jewelry heats up and higher gasoline and mortgage costs slow consumer spending.LVMH Moet Hennessy Louis Vuitton SAs gain in sales of fashion and leather goods may slow below the 11 percent the Paris-based company recorded in 2006, said John Guy, an analyst at MF Global Securities in London. Louis Vuitton doesnt provide revenue figures for units.
PPR SAs Gucci and the closely held handbag makers Dooney & Bourke Inc. and Prada SpA declined to provide sales forecasts.20 PercentU.S. sales of handbags costing at least $100 may expand 20 percent this year, compared with 22 percent last year, according to research from New York-based Coach Inc., which says its the U.S. leader with 31 percent market share. Coach and Telsey provided industry sales data on handbags back to 2001, after demand had ignited in the late 1990s.
“Slower growth in the handbag segment overall is a prudent outlook given the economic situation we find ourselves in right now, said Patricia Edwards, who helps manage $11.9 billion, including Coach shares, at Wentworth, Hauser & Violich in Seattle.
Coach is taking a positive view of the market, spokeswoman Andrea Resnick said. The projected U.S. sales gain of 20 percent is an extension of five years of gains, Resnick said.
Coach fell $1.55, or 3.3 percent, to $45.10 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 5 percent this year, lagging behind the 7.8 percent climb for LVMH.
Bracelets, ShoesHandbag makers, led by Coach and Louis Vuitton, are vying for the attention of consumers who are spending money on Tory Burch ballet flats and David Yurman bracelets, retail executives said.
The handbags status as a must-have item is being challenged, according to Saks Inc. Chief Executive Officer Stephen Sadove, whose stores sell Coach, Louis Vuitton, Prada, Fendi and Chanel purses.
“It used to be all about the shoes and our woman had so many shoes in her closet, then it became the multiplicity of handbags, Sadove told investors at a Goldman Sachs Group Inc. conference on Sept. 6. “What you are seeing now is a new trend, which is branded designer fine jewelry.
Coach expects its total revenue from worldwide sales to increase 21 percent in the year through June 28, 2008, Chief Financial Officer Michael Devine told analysts meeting at its headquarters on Sept. 7. Thats below the 28 percent rise recorded for the previous year. Handbags accounted for 64 percent of Coachs sales in the year ended June 30. Coach has expanded into jewelry, shoes and fragrances.
New ProductsSales at North American Coach stores open at least a year will gain “north of 10 percent, Devine said. His guidance is similar to what the company has said in prior years. In the year ended June 2007, those sales rose 22 percent. Most of Coachs handbags cost $200 to $400.
While Coachs sales may show signs of slowing, they are still strong, said Margaret Gilliam, a former Goldman Sachs analyst who runs retail consulting firm Gilliam & Co. in New York.
“Ten percent is a very good comparable sales growth rate, Gilliam said. “Growth just doesnt go at that rate for everybody.Coach is introducing three handbag lines this year. Coach needs new popular products and faster economic expansion to sustain revenue gains of recent years, money manager Edwards said.
`Problematic Growth“The growth further out might be more problematic unless they have a fabulous product line coincidental with better economic news, Edwards said.Louis Vuitton has found that “growth in the U.S. luxury market segment continues to accelerate on an annual basis, said Molly Morse, a spokeswoman. She declined to provide more detailed figures.
At Prada SpA in Milan, “we are growing the handbag business at a faster pace compared to other product categories, said Tomaso Galli, a spokesman, without giving specifics. “We plan to continue to do so going forward.
While sales gains may be slowing, handbags are the fastest- growing part of the U.S. fashion industry, ahead of earrings, wallets and other small leather goods, according to NPD Group Inc., a market research firm in Port Washington, New York.
Positive ProspectsA Goldman survey of 1,550 consumers, released in June, found that 32 percent expected to buy fewer handbags this year. About 18 percent said theyd buy more, and 51 percent said they planned to purchase