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July 12, 2017 | Coach Inc. | COH

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This well-known luxury brand is expanding its reach and going after a younger audience that could help it grow for years to come. That’s why it is this week’s Stock of the Week.

Expanding Luxury

Coach Inc. (COH), well-known for making and selling high-end handbags, apparel, footwear and accessories, is expanding its reach both geographically and demographically.

It acquired luxury shoemaker Stuart Weitzman last year and recently announced plans to acquire competing handbag-maker Kate Spade. These moves should help Coach diversify its offerings and may help it appeal to a younger demographic, as Kate Spade is already very popular among millennials.

Coach is something of a contrarian play. Retail firms in general have had difficulties lately, and a worldwide economic downturn could harm sales of luxury brands overseas—which are increasingly important to Coach, whose management is looking for sales boosts in Europe and Asia. But Coach is well-positioned to grow in both the US and elsewhere.

Revenue of $4.5 billion last year should grow to $4.503 billion this year and $4.712 billion in 2018. And the generous dividend appears secure: It is $1.35/share/yr., recently yielding 2.8%.

Fiscal year: June. Earnings per share: 2018 est./$2.39…2017 est./$2.16…2016/$1.65.

Andrew A. Arons is managing partner at Synergy Advisory Management Group LLC, Hackensack, New Jersey, which manages $150 million. SynergyAMG.com

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Date: July 12, 2017
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