Why Did Coach Buy Stuart Weitzma?

Coach Inc. (NYSE:COH) Cox group announced in January that it would buy high-end women's shoes brand Stuart Weitzman Holdings LLC with a maximum of $574 million to private Holdings Company Sycamore Partners LP, 6.

For Coach Inc., which is trying to revive its own business, the deal has not been favored by the industry. On the contrary, many brokers are worried about the reports of investors.

It may distract Coach Inc., whose core is handbag business.

Although $574 million is not a huge purchase for Coach Inc. Cox, who has 900 million dollars in cash and equivalents and generates nearly 750 million cash flow in the past year, it is also not the number of expenditures that can be impulsive. The industry is not optimistic about the current predicament of Coach Inc., but the retail environment, consumer confidence and brand itself are dynamic developments.

So the success of the paction will still have to wait 3-4 years later.

Inc. Cox's overall performance, product organization, and even new paction or split can draw the final conclusion. It is certain that Coach Inc. has its own trading reasons, which are, of course, not the official wording in the trading statement.

Although the total

Coach Inc. is still the number one brand in North America in the past fiscal year, but in fact, Coach Inc. has been surpassed by Michael Kors Hodlings Ltd. (NYSE:KORS) in the past quarter.

According to the data, the total revenue of Coach Inc. was $1 billion 38 million 800 thousand in the first quarter of September 27, 2014, while the Michael Kors group's second quarter revenue has exceeded Coach Inc. for the first time in the same period of 1 billion 56 million 600 thousand dollars.

In the North American market in the quarter, Coach Inc. earned $634 million, far below the Michael Kors Michael group's $802 million 200 thousand.

According to the data of this quarter, the first brand in North America has been returned to Michael Kors.

In addition, both the overall revenue and the North American market Coach Inc. are still in a downward trend, while Michael Kors still maintains a relatively high growth rate, so the gap between the two brands will be bigger and bigger.

According to the announcement of Coach Inc., the annual sales of Stuart Weitzman amounted to 300 million US dollars. After the acquisition, with the help of Coach Inc., enterprises such as Stuart Weitzman can generally reach the upper limit of the growth scale of 10%-30%, while the 300 million scale can also allow the sales of Coach Inc. group to achieve an increase in the first year of sale without any merger and acquisition, and the negative growth of the company will disappear with the recovery of its business and the growth of its revenue.

This is a good thing for investors and group size, and it can continue to maintain pressure on Michael Kors.