Coach Inc Net Income dropped on 48.5% in 2015 and EBITDA Margin decreased on 7.9 pp from 27.2% to 19.3%
04/08/2015 • About Coach Inc (
$6388) • By InTwits
Coach Inc reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 19.3% in FY2015 vs. 27.2% in FY2014 vs. 34.4% in FY2011
- Coach Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.3%. At the same time it's in pair with industry average of 8.6%.
- CAPEX is quite volatile: 103 in 2015, 529 in 2014, 407 in 2013, 521 in 2012, 533 in 2011
- The company has highly profitable business model: ROIC is at 20.8%
- It operates with high leverage: Net Debt/EBITDA is -0.5x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Coach Inc ($6388) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,159 | 4,763 | 5,075 | 4,806 | 4,192 | -12.8% |
| Gross Profit | 3,024 | 3,466 | 3,698 | 3,297 | 2,909 | -11.8% |
| SG&A | 1,719 | 1,954 | 2,174 | 2,177 | 2,291 | 5.2% |
| EBITDA | 1,430 | 1,645 | 1,688 | 1,309 | 810 | -38.2% |
| Net Income | 881 | 1,039 | 1,034 | 781 | 402 | -48.5% |
Balance Sheet
|
|---|
| Cash | 700 | 917 | 1,063 | 592 | 1,292 | 118.2% |
| Short Term Debt | 1 | 22 | 1 | 140 | 11 | -92.0% |
| Long Term Debt | 23 | 1 | 0 | 0 | 879 | |
Cash flow
|
|---|
| Capex | 148 | 184 | 241 | 220 | 199 | -9.2% |
Ratios
|
|---|
| Revenue growth | 15.3% | 14.5% | 6.6% | -5.3% | -12.8% | |
| EBITDA growth | 12.0% | 15.0% | 2.6% | -22.4% | -38.2% | |
| Gross Margin | 72.7% | 72.8% | 72.9% | 68.6% | 69.4% | 0.8% |
| EBITDA Margin | 34.4% | 34.5% | 33.2% | 27.2% | 19.3% | -7.9% |
| Net Income Margin | 21.2% | 21.8% | 20.4% | 16.3% | 9.6% | -6.7% |
| SG&A, % of revenue | 41.3% | 41.0% | 42.8% | 45.3% | 54.6% | 9.4% |
| CAPEX, % of revenue | 3.6% | 3.9% | 4.8% | 4.6% | 4.8% | 0.2% |
| ROIC | 82.0% | 82.3% | 68.7% | 45.0% | 20.8% | -24.3% |
| ROE | 56.5% | 57.6% | 47.0% | 32.4% | 16.4% | -16.0% |
| Net Debt/EBITDA | -0.5x | -0.5x | -0.6x | -0.3x | -0.5x | -0.2x |
Revenue and profitability
Coach Inc's Revenue dropped on 12.8% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 7.9 pp from 27.2% to 19.3% in FY2015.
Gross Margin increased slightly on 0.79 pp from 68.6% to 69.4% in FY2015. SG&A as a % of Revenue increased on 9.4 pp from 45.3% to 54.6% in FY2015.
Net Income marign decreased on 6.7 pp from 16.3% to 9.6% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Coach Inc had CAPEX/Revenue of 4.8%. Coach Inc showed small growth in CAPEX/Revenue of 0.89 pp from 3.9% in FY2012 to 4.8% in FY2015. It's average CAPEX/Revenue for the last three years was 4.7%.
Return on investment
The company operates at high and attractive ROIC (20.79%) while ROE is a bit lower (16.39%). ROIC dropped on 24.3 pp from 45.0% to 20.8% in FY2015. ROE dropped on 16.0 pp from 32.4% to 16.4% in FY2015.
Leverage (Debt)
Debt level is -0.5x Net Debt / EBITDA and 1.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from -0.3x to -0.5x in FY2015. Debt surged on 534% in FY2015 while cash jumped on 118% in FY2015.
Management team
The company's CEO is Victor Luis. Victor Luis has 4 years tenure at the company.
Appendix 1: Peers in Retail
Below you can find Coach Inc benchmarking vs. other companies in Retail industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Household Holdings Ltd ($692) | -87.0% | -32.8% | 5,357.9% | 76.2% | |
| Ming Fung Jewellery Group Ltd ($860) | 21.9% | 3.3% | -14.9% | 54.3% | |
| Merry Garden Holdings Ltd ($1237) | 53.9% | 37.1% | 12.8% | 47.6% | |
| Luk Fook Holdings International Ltd ($590) | | 47.2% | 12.6% | 43.3% | -17.1% |
| NewOcean Energy Holdings Ltd ($342) | 19.3% | 23.1% | 15.9% | 36.0% | |
| |
|---|
| Median (109 companies) | 21.8% | 10.0% | 5.9% | 3.1% | -2.8% |
|---|
| Coach Inc ($6388) | | 14.5% | 6.6% | -5.3% | -12.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Culture Landmark Investment Ltd ($674) | 77.5% | 91.1% | 99.4% | 99.5% | |
| Modern Beauty Salon Holdings Ltd ($919) | 97.3% | 97.4% | 95.9% | 96.8% | 96.7% |
| Vongroup Ltd ($318) | | | | 95.1% | 99.1% |
| Nanjing Sinolife United Co Ltd ($3332) | 80.6% | 86.5% | 89.3% | 90.9% | |
| Embry Holdings Ltd ($1388) | 82.3% | 81.2% | 80.4% | 82.3% | |
| |
|---|
| Median (98 companies) | 39.4% | 37.2% | 36.4% | 35.1% | 44.9% |
|---|
| Coach Inc ($6388) | 72.7% | 72.8% | 72.9% | 68.6% | 69.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Maoye International Holdings Ltd ($848) | 45.5% | 47.4% | 46.3% | 73.2% | |
| China Dongxiang Group Co Ltd ($3818) | 5.6% | 6.0% | 5.6% | 58.3% | |
| Nanjing Sinolife United Co Ltd ($3332) | 47.8% | 51.6% | 56.9% | 54.4% | |
| Lifestyle International Holdings Ltd ($1212) | 49.6% | 47.5% | 47.0% | 44.7% | |
| Golden Eagle Retail Group Ltd ($3308) | 52.1% | 48.5% | 47.3% | 42.8% | |
| |
|---|
| Median (109 companies) | 13.1% | 9.6% | 7.1% | 7.9% | 6.0% |
|---|
| Coach Inc ($6388) | 34.4% | 34.5% | 33.2% | 27.2% | 19.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Intime Retail Group Co Ltd ($1833) | 58.4% | 28.3% | 55.4% | 37.0% | |
| Future Bright Holdings Ltd ($703) | 6.2% | 2.6% | 3.7% | 36.8% | |
| Sage International Group Ltd ($8082) | 20.4% | 236.6% | 28.2% | 35.4% | |
| Maoye International Holdings Ltd ($848) | 30.9% | 32.8% | 24.1% | 31.5% | |
| Tsui Wah Holdings Ltd ($1314) | 5.2% | 8.3% | 9.3% | 30.5% | 10.6% |
| |
|---|
| Median (109 companies) | 3.9% | 4.0% | 3.6% | 3.4% | 2.2% |
|---|
| Coach Inc ($6388) | 3.6% | 3.9% | 4.8% | 4.6% | 4.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | 48.1% | 50.7% | -4.6% | 81.3% | 71.8% |
| Starbucks Corp ($4337) | 36.4% | 36.4% | -6.0% | 52.8% | |
| Sa Sa International Holdings Ltd ($178) | 45.7% | 53.5% | 52.7% | 49.0% | 39.8% |
| Nanjing Sinolife United Co Ltd ($3332) | 57.4% | 67.3% | 68.1% | 32.2% | |
| Bonjour Holdings Ltd ($653) | 83.7% | 69.1% | 65.5% | 30.9% | |
| |
|---|
| Median (109 companies) | 16.6% | 11.8% | 8.2% | 8.2% | 4.4% |
|---|
| Coach Inc ($6388) | 82.0% | 82.3% | 68.7% | 45.0% | 20.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sparkle Roll Group Ltd ($970) | -0.8x | 0.6x | 4.0x | 9.3x | 23.5x |
| China Yongda Automobiles Services Holdings Ltd ($3669) | 3.3x | 3.4x | 4.7x | 5.5x | |
| Zhongsheng Group Holdings Ltd ($881) | 2.2x | 4.6x | 4.5x | 5.3x | |
| NewOcean Energy Holdings Ltd ($342) | 35.2x | 6.2x | 6.1x | 5.3x | |
| Century Ginwa Retail Holdings Ltd ($162) | 6.5x | 2.0x | 2.5x | 4.8x | |
| |
|---|
| Median (85 companies) | -0.8x | -0.6x | -0.9x | -0.2x | -0.5x |
|---|
| Coach Inc ($6388) | -0.5x | -0.5x | -0.6x | -0.3x | -0.5x |
