Thursday, December 11, 2014

$COH/$LVMUY - Coach Targeted by LVMH

LVMH groups representatives have recently shown interest in Coach, sources say. Recent shows and fashion line has appealed to the design team of LVMH, one of the persons admits. It could be the turnaround that attracts LVMH – turning its attention from classical high end luxury accessories label to full RTW apparel lineup. Coach of course is known for its rock solid American style handbag business, but it’s doubtful that the French giant would would only be interested in that, although it’s a strong supporting financial factor.
Coach will present its new collection in January at London Collections. Plan to expand into menswear means Coach has serious plans regarding apparel, which is followed closely by top fashion strategists. Coach has had some trouble recently, when the first quarter results came as a disappointment, when the Chinese market showed weak growth and issues remain in North America. As the underlying fashion business remains solid and Coach is looking to expand, this might seem as an attractive opportunity.
Few years ago LVMH bought Bulgari, as Hermes turned out to be too big of a bite. LVMH acquired 51% stake in Bulgari with 16.5 million LVMH shares and giving Bulgari 2 seats on the LVMH board. After that, it was speculated that Burberry might be the next target, although rival PPR had its eyes on it. Even though LVMH has expressed its interest to acquire more brands, it’s unclear whether with Coach there’s a potential acquisition looming or it’s more of a competitive interest. Given the profiling of LVMH and recent developments with Coach, former is suspected.