I have never been so expensive

“Hey LG, see what I bought for you?” I was woken up by my wife and was “shocked” by what I saw.

We had a good friend coming to the US for a short visit and we flew to Seattle in May to meet her and also took the opportunity to drive her to Vancouver for a quick trip. On the highway 5 to the border, we saw a huge outlet mall for all kinds of brand names. Naturally our friend was very interested to stop by and buy something. Since I was not so interested in shopping, I was dozing in the car while my wife and her friend went for shopping. Then I was waken up by my wife and saw a beautiful wallet in her hand. It is a Coach wallet costing $50 (half price already) and I was “shocked” because I have never been so luxury to buy such a “costly” wallet in my life! You see, all the Chinese friends in our generation must understand we were all in extreme poverty when we grew up before 1980s. Basically we didn’t have any money to buy anything beyond basic life, period! So frugality has been engraved onto our bone I suppose. Buying luxury goods or brand name stuff has never made us happier and we are always looking for cheaper alternatives whenever possible. Even nowadays money is not an issue anymore and we basically could afford to buy anything we want, but it is still a waste for us to buy more expensive brands if we can buy something cheaper. And we hate waste in all aspects, even wasting anything not belonging to us!  This is how cheap I’m but I feel no shame at all and actually enjoy very much whenever I can find something cheaper. My wife has a famous saying that I like enormously: As long as I know I can afford it, I don’t need to own it but will just be happy and satisfied to leave it in the store where I can go to see it when I like. That’s why I love my wife so much as she never looked down at me when I could not afford to buy a ring for her when we married and even till now I still haven’t bought any stone ring for her. But we have happily married for nearly 35 years by now.👫😇 A frugal life style has never diminished our happiness. Instead it has strengthened our marriage life in many aspects. Now back to the wallet. I had been used my old wallet for over 10 years which costed me about $10. While it looked not pretty anymore, I still liked it and didn’t want to change it. But my wife had laughed at me for quite a while and kind of forcing me to change to a new one as she thought I was worth a bit more now.😎 😎So she bought this “expensive” wallet for me without asking for my “permission”. Thanks, Honey but I wish it could be a bit cheaper!😏

Of course, I’m not here to try to instill my life style onto anyone else. This is a very personal choice. As long as you are happy with it, nothing wrong to go either luxury or frugal. It’s none of my and anyone’s business. My real point here is to talk about the company for my new wallet, Coach. If you are not yet aware, the company has changed its name recently to Tapestry (TPR). I assume there in no need to say too much about Coach but briefly,  Tapestry, Inc., formerly Coach, Inc., is a design house of luxury accessories and lifestyle collections. The Company's product offering uses a range of leathers, fabrics and materials. The Company's brands include Coach, Kate Spade, and Stuart Weitzman. Coach has been around since 1941 and is a globally well-known and recognized luxury brand. It has gone through some tough time in the recent years but has definitely recovered in the past 2 years. While its market in the US may be already mature and has less room to grow, its international footprint has been expanding quite aggressively. The Coach brand is especially loved in major emerging markets like China and India where the market is massive and growing when their middle class is expanding. I like its prospects and also its fundamentals. With a good recovery in the past 2 years, it is not really cheap at the current price but still reasonable considering how profitable its business is. Its forward P/E is 18 with a massive gross margin of 65%. Its debt is negligible and is generating half billion free cash flow. It pays a respectful dividend yield nearly 3%. Although its dividend history is not long (starting from 2009), it has grown its dividend at an annual rate about 4%. On top of that, it has also consistently bought back shares, an indirect return to long term shareholders.  I don’t see it will slow down in growing its business as well as returning to shareholders in the years to come. Coach just reported its recent earnings the passing week and investors were apparently excited to see its results and shot up its share price by 12% on the day.

Although I’m not a good customer for Coach and probably will never be since I’m cheap, I like Coach for the stock for its long term prospects!