When The Coach Became Tapestry
With the purchase of Kate Spade next year, the company estimates that it should grow to about 6 billion dollars.
From 31 October, the Coach group of companies will be called Tapestry. This will allow them to a better distinction of the different brands of the company since the group diversified and recently acquired the brand Stuart Weitzman in 2015 and Kate Spade this summer.
«Three years ago we laid out our vision to transform Coach and announced our intention to grow beyond the Coach brand. Through the execution of our strategic plan and with the acquisitions of Stuart Weitzman in 2015 and Kate Spade & Company just this summer, we have realized these goals. We are now at a defining moment in our corporate reinvention, having evolved from a mono-brand specialty retailer to a true house of emotional, desirable brands, all leveraging our strong operational foundation. Each of our brands has a unique proposition, fulfilling different fashion sensibilities and emotional needs within the very attractive and growing $80 billion global market for premium handbag and accessories, footwear and outerwear « said the CEO of the group of companies Victor Luis, in a recent press release.
The company’s turnover for 2016-17 amounted to 4.49 billion dollars. With the purchase of Kate Spade next year, the company estimates that it should grow to about 6 billion dollars.
Coach turnover was, while Stuart Weizmann was 8.5% of the total group, and grew 8% compared to 2016 ($ 377 million vs. 344 million). Sales of The Coach brand in North America, accounting for more than half of all group revenues, fell 2 percent to $ 2,349 million, while sales outside the original continent rose 0.7 percent %, up to $ 1,745 million.
Victor Luis in his statement added: «We searched for a name to reflect these values while also expressing the cultural diversity of our people and our brands for today and tomorrow. In Tapestry, we found a name that speaks to creativity, craftsmanship, authenticity and inclusivity on a shared platform and values. As such, we believe that Tapestry can grow with our portfolio and with our current brands as they extend into new categories and markets. The name embodies our creative brand-led and consumer-focused business, while also representing the deep heritage of the group. Most importantly, we are establishing a strong and distinct corporate identity, which enables our brands to express their individual personalities and unique language to consumers.»
It clearly seeks an identity beyond the image that had its original brand, supporting in this way newly acquired brands, creating synergies between them.
Cold reaction from markets
The reaction in social media may not have been what the company expected, as many questioned or criticized the decision to change the company’s identity after more than 75 years. The reaction of the market on the day of the announcement was not positive either; Coach shares fell nearly 3% Wednesday to $ 38.87 (their 52-week trading range moved between $ 34 and $ 48.85.) Coach will also switch its ticker symbol from COH to TPR by the end of the month and will continue to trade on the New York Stock Exchange.
The Coach has suffered a stagnation in sales and operating profit in recent years, in fact has not exceeded turnover of USD 5 billion since 2013, plus its operating profit was half, at the end of the current fiscal year , that of 2013, (759 thousand USD against 1521), although its profitability has improved 20% since last year.