Byline: Wendy Hessen

NEW YORK — Coach joined the ranks of publicly owned fashion and retail companies Thursday, and its stock got off to a reasonably strong start.
Priced at $16, the high end of its anticipated price range of $14 to $16, the offering of 7.38 million shares reached a high of $21.50 during the day and closed at $20.31 with nearly 5.6 million shares traded. At one point during the morning, Coach, trading under the ticket symbol “COH,” was among the biggest gainers on the New York Stock Exchange. It registered a 27 percent gain for the day.
Goldman Sachs was the lead underwriter for the initial public offering (IPO), along with Morgan Stanley Dean Witter and Prudential Securities.
Among those gathered on the platform above the trading floor for the opening bell were Coach chief executive officer Lew Frankfort and his wife Bobbi; Dave DeMattei, president of retail, and executive creative director Reed Krakoff.
The $78 million in capital raised after the net proceeds of the offering will be used to pay off what Frankfort described as a majority of Coach’s debt to its former parent company, Sara Lee Corp., which still retains about 80.5 percent of the leather goods firm.
“This has been a lifetime in the making,” said Frankfort earlier in the morning. “We see this IPO as a coming of age for Coach. We’re thrilled that Sara Lee sees us as strong enough to go it alone. It is a validation of our positioning. We now have a renewed platform for growth and broader, more modern products, and a very loyal and strong consumer following. We have an incredible emotional bond with our customers and are confident that we will be able to provide them with more in the future.”
Frankfort said the company would accelerate its new store openings — with 50 more units slated to open in the U.S. over the next three years — while continuing renovations on current stores. Increasing international business, particularly among Japanese consumers, is among other objectives Frankfort hopes the offering will support.
“The Japanese have an affinity for quality and have sought out Coach’s distinctive American attitude and authenticity,” Frankfort said. “We currently have eight freestanding stores in Japan. The Japanese spend a disproportionate amount — roughly four times their American counterparts — on luxury accessories.”
In a separate development, Sara Lee ceo Steve McMillan told analysts in Chicago that consolidations and divestitures could result in overhead cuts equaling 2 to 3 percent of annual revenues by 2003. “We’ll be moving to a smaller number of larger, more focused companies,” he said.
With the possible sale of some of its other brands and businesses, Sara Lee’s 30 apparel units could be reduced to less than one-third that number in the next several years, McMillan noted.
Sara Lee’s stock ended the day at $19.88, up 31 cents. Sara Lee has said it will spin off the remainder of its Coach holding sometime in the next 12 months and would also likely sell off Champion, another subsidiary.
Coach, which was founded in New York in 1941 and had sales of about $550 million last year, had been owned by Sara Lee since 1985.

load comments
blog comments powered by Disqus