Saturday, June 7, 2008
Made up numbers just as good as real ones #2
Business Week's June 9, 2008 edition page 66 has a great article by Jane Porter on Coach feeling the pinch in the luxury brands market. The esteemed Chairman & CEO of Coach, Lew Frankfort (that's Lew on the right) decided to change the revenue reporting. In the past the regular store and outlet store sales were reported separately. Makes sense to me. However, sweet Lew decided to combine the two numbers in his latest report. Hummm I wonder why he would do that just now? Is it possible there is something happening the shareholders may not be too pleased with?
This is one of those meetings that I would give my credit card debt to be a fly on the wall in that meeting. OK, I never claimed to be a great negotiator. Anyway, this reminds me of a great bit done by the British comedian Eddie Izzard where he imagines the meeting when record executives decided singer Jerry Dorsey's name should be changed to Engelberg Humperdinck. Eddie re-enacts his version of the brainstorming secession including Jerry's protests along the way. This is funny stuff. A link to the video clip is below.
I would love to see the trial list of reasons sweet Lew's team came up with to rationalize the change in Coach's revenue reporting. Bob in accounting was on vacation so we didn't have time to run the numbers separately. The satellite feed merged the numbers and we couldn't separate them. We decided to go "Green" and save paper by printing one less column on the reports. We're running Windows Vista, what can we do? We are selling a lot more in the outlet stores -- no, no, no, that will look very bad. My favorite and the one they finally settled on is, the combined number better represents the business. Is this really what they think? Probably not, I think they had very few choices.
Obviously things aren't looking all that good for Coach and sweet Lew and he knows it. This last little maneuver is probably just the latest in a litany of moves used to stem the tide, spin the data and control the message. The economy is tough and luxury goods companies like Coach that sold down the market will struggle while people who used credit cards and home equity loans to buy their products struggle to recover. Is it really Lew's fault? The shareholders wanted growth, he delivered growth with the retail and outlet store strategy. Can we blame him for holding on for dear life? Chairman and CEO at Coach has to be a great gig.
I think Lew should hang in there we never know what is going to happen. After the Bear Stearns deal Ben Bernanke may buy a few million Coach briefcases and give them away free to anyone who buys a house and takes out a mortgage in 2009. In which case Lew will look like a hero and comes out smelling like a rose.
Thanks for reading and enjoy Eddie.