Yahoo Finance Why Is Coach Changing Its Well-Known Name?
In this segment from the Market Foolery podcast, host Chris Hill and Motley Fool Asset Management's Bill Barker ask: What's in a name? Will Coach (NYSE: COH) by the name Tapestry sell as sweet? The company has over the past few years acquired other brands, such as Kate Spade and high-end shoemaker Stuart Weitzman, but it's not obvious that it really needed an new "umbrella" name to go over its portfolio. The Market Foolery guys rarely see the point of these changes, but they also don't usually hurt.
A full transcript follows the video.
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This video was recorded on Oct. 11, 2017.
Chris Hill: The news fairy, as mentioned at the top of the show, showed up this morning with the news that Coach is changing the name of the company to Tapestry. Let's go over that again, shall we? Coach, known for middle- to high-end handbags, mainly that, is changing the name of the company to Tapestry. I'm guessing, because I haven't read the company's statements -- you and I were actually in a conference room together talking about, well, what are we going to talk about on the show today, and this news came over the Twitter feed, and you said, "Let's not actually do any research. Let's not read what the company says. Let's not read about their justification." And I think longtime listeners would expect nothing less from us than to do absolutely no prep whatsoever on a story like this.
Bill Barker: I think the thing they would be most surprised by is the implication that we have done research for some other stories. You do research.
Hill: I do some research, yeah. And clearly you did with that Wal-Mart (NYSE: WMT) article you read.
Barker: Three years ago. I just have a phenomenal memory. Like Trump. He has an amazing memory, or so he says.
Hill: I'm not even going to go there.
Barker: You're smart. [laughs]
Hill: Coach has, over the last couple of years, branched out and made some acquisitions. They bought Kate Spade, they bought Stuart Weitzman, and I'm assuming that Tapestry is the parent name that they're going with, and they're going to keep the Coach stores. They're not going to rebrand the Coach stores or Coach handbags as Tapestry. I don't know. My gut instinct in situations like these, and certainly with Tronc, with Tribune Media announcing that they're changing to Tronc, my batting average is actually pretty bad when it comes to making fun of companies who have name changes. Putting aside Tronc -- I'm standing by that one. I feel good about that one.
Barker: That's a long-term play.
Hill: That's a long-term play I feel good about. But in the past, when Philip Morris changed their name to Altria, when Arthur Andersen changed to Accenture, when Google changed to Alphabet, I was like, what, are you kidding me?
Barker: Oath.
Hill: Yahoo! is no longer really a stand-alone public company.
Barker: Yeah, but Verizon putting AOL and Yahoo! under the exciting Oath brand.
Hill: I'm saying, you could look at those other occasions and say, that was a good time to buy those stocks, when Chris was totally mocking the name change. Because you would have done well if you had bought Philip Morris when it changed to Altria, Arthur Andersen when it changed to Accenture, and Google pretty much at any point.
Barker: That's not to imply that you're not going to mock this name change. It's just the mocking may not mean "Don't buy the stock."
Hill: Exactly.
Barker: So, Tapestry. I think, as this was mocked downstairs momentarily before I came up here, and Nate Weisshaar pointed out intelligently, so I'll steal it, this seems to imply a reach out to royalty with the tapestry. Because what do you think of when you think of tapestries?
Hill: Honestly, when I just saw they're changing their name to Tapestry, I am of a certain age where my mind went immediately to Carole King's album.
Barker: Oh.
Hill: Great album by Carole King, with a ton of great songs on it. Tapestry.
Barker: Can you sing any? Can you hum a few?
Hill: Nope, not going to do that. Not going to punish the listeners. Maybe we'll throw something on to the end of the show. Anyway.
Barker: Dan Boyd, he's got a better voice.
Hill: Yeah, he actually has musical talent. So Nate was going, they're going after royalty?
Barker: Because don't you picture a castle? How are you decorating the castle?
Hill: Put some tapestries up.
Barker: I think it's a Game of Thrones play. Now that all that 16th century, or whenever that might have occurred, imagery is in people's minds.
Hill: You think they're going to offer some sort of tie-in with Game of Thrones? Something dragon related?
Barker: What's the adjective that comes to mind when you think of Tapestry? You've got it, rich. A rich tapestry. That's what always modifies tapestry, right? A rich tapestry is a metaphor for life or experiences or something like that. So you've got the rich play there as well.
Hill: Do you think some version of this conversation we're having right now played out in a board room at Coach?
Barker: Well, an intelligent version of this conversation.
Hill: That's what I meant.
Barker: Rather than a mocking one. "Let's come up with the name we can mock!"
Hill: That's the thing. Someone said, "Here's the name. It's Tapestry. Here's why."
Barker: Yeah, because "Umbrella" is taken. What it implies is, here's the intelligent part of it -- Coach, for a long time, stand-alone company, running the Coach stores, and then it makes a play to diversify for Stuart Weitzman and Kate Spade. So at this point, what I believe management is saying and has been saying to the employees of the acquisitions is, "You're not the smaller side-project, that Coach is the big thing that we care about in this company, and that's the namesake." Now they changed their name, it's like, "Hey, we're a tapestry of many different companies," and a rich tapestry, I think they would be so bold as to say, "and you're a part of it. And everybody is playing an equal part."
Now, that may or may not be taken by everybody, or they may want to hold on to their independence to the degree that they can within this rich tapestry of companies that is being woven by the management of Coach, or, formerly known as Coach. I think the communication is probably more both within the company and to investors as, "Hey, don't look at what's going on with Coach. Look at what's going on in the luxury-brand conglomeration that we're building."
Hill: So on the surface, you're leaning more toward Alphabet than Tronc, on the spectrum of rebrands.
Barker: Yes. You really hate Tronc.
Hill: What's not to hate? [laughs]
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Bill Barker has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Coach, and Verizon Communications. The Motley Fool recommends Accenture. The Motley Fool has a disclosure policy.
