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| | Why Coach?
Coach is a designer and marketer of luxerious accessories and handbags. The Coach brandame is strong in the USA and consumers are willing to buy a premium to get a Coach handbag. Coach is opening new shops in Japan and Russia.
A main risk is that fashion can change really quickly and if Coach is not able to sell "what is hot" their sales will decrease. Also an economic downturn could have a short term negative impact on their financial results as people tend to postpone purchases of luxerious articles during a downturn.
Their balance sheet is very strong. They have no debt. The return on equity is 41% and the return on assets is 31%.
Their net income / tot assets is about 0.4 and their net income/non current assets is 0.75.
These are all indications that the Coach articles creates a competitive advantage and they can increase revenue by opening new stores.
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