Coach Launches A New Brand

In IBD's database, Coach (COH) has an Earnings Stability Factor of 6 on a scale of 1 to 99, with 1 representing those with the stablest profit growth. How does Coach score such high stability in profit in the fickle industry of women's and men's apparel and accessories? Step into a Coach store frequently and you'll see that it is a master in constantly introducing new items in its signature category of handbags and purses. It never stops innovating with fresh designs, materials, shapes and colors. Coach also sells new handbags in limited quantities and keeps prices much lower than Louis Vuitton or Gucci, encouraging repeat customers. Until now, Coach hasn't tried to dress its customers completely from head to toe. Selling shirts, pants and sweaters would force it to spend more on real estate and inventory. Coach would also have to compete with a broader range of apparel firms. But it has recently launched a new brand of luxury bags, shoes and a dash of clothing bearing the name of its creative director Reed Krakoff. It has three RK stores in New York, Las Vegas and Tokyo. It also sells items in Saks Fifth stores and other boutiques. Coach's profit has grown every year since fiscal 2002 except in 2009, down 7%.