Tapestry, Inc. (TPR)

Tapestry owns Coach and Kate Spade — handbags and accessories in the accessible luxury segment.

Accessible luxury lives by its own rules: the customer wants a recognisable item but will not pay European fashion house prices. Volumes are therefore larger and prices lower — which makes it all the more important not to slide into permanent discounting, which devalues a brand fast. Coach went through exactly that fall and spent years recovering.

The present strategy is a younger audience and selling direct instead of through outlets and department stores: an owned shop and site deliver both the mark-up and customer data. An attempt to buy a competitor with a portfolio of other brands was stopped on antitrust grounds. Risks: fashion, discretionary accessory spending and demand in Asia. The company pays a dividend and buys back stock actively.