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Coach -- Japan's Love of High-End Luxury Items (COH)

Feb. 02, 2006 11:14 AM ETTapestry, Inc. (TPR)1 Comment
Steven Towns profile picture
Steven Towns
295 Followers


What do you think about the following statistics?

Japanese consumers purchase 40 percent of the world's luxury goods every year. A 2002 survey found that 94 percent of Tokyo women in their 20's own a Louis Vuitton (Euronext PAR: LVHM) product; 92 percent own Gucci (ADR: GUCG.pk), 58 percent own Prada, 52 percent own Chanel, and 44 percent own Christian Dior (Euronext PAR: CDI). Consumer habits such as these have driven a growing number of the world's luxury retailers to open stores in Japan to better meet consumer demand.

The most recent big name luxury entrant into Japan's lucrative market is Coach (COH), which arrived in 2001 and now derives more than 20% of its global revenue from Japan, its second largest market outside North America. Let's take a further look at what's going on at Coach Japan.

First, I must give credit to JETRO, the trade arm of the Japanese government that just published a report on the Japanese retail market with the above mentioned statistics and a case study on Coach. Also below I will use Coach's Q2-'06 (quarter ended Dec. 31, '05) earnings conference call transcript to highlight Coach Japan's activities and achievements.

Within the JETRO study it's stated, "Foreign luxury retailers also have established R&D facilities to refine their products to meet Japanese consumer standards, which then serve as a benchmark for worldwide success of their products." And Richard Collasse, president of Chanel K.K., is quoted saying, "Looking at our efforts in innovation, we established our own R&D unit in Japan, since this country unquestionably has the most advanced technology in cosmetics. We made this investment because we concluded that we needed to develop products for not only Japan but also the global market."

JETRO on Coach

• Coach Japan is a wholly-owned subsidiary of Coach

This article was written by

Steven Towns profile picture
295 Followers
Steven is the founder of Uguisu Research, a provider of bespoke Japanese equity research. He is also the author of 'Investing in Japan: There is no stock market as undervalued and as misunderstood' (2012). 'Investing in Japan' fills the void of information about Japanese stocks, providing a comprehensive overview of the market, challenging conventional wisdom of Japan being on its last leg, and providing insightful discussion of many key aspects to investing in Japan, including the strategies of investment funds, leading hedge funds, idiosyncrasies of the market, returns on equity, shareholder rights, and more. Link to Investing in Japan on Amazon: http://amzn.to/AENfeH

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Comments (1)

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