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Coach (NYSE:COH) seems to have a lot of growth potential in the next few years, like I discussed in a previous article. It has now recovered from its lows of 2009. The luxury brand industry gets impacted a lot by the market sentiments. Therefore the next few years might prove to be a boom for the industry because of the improving economic scenario in the US. As Coach is a major player in the industry, Balenciaga Bags Outlet it is also expected to experience better financial performances.

Previously its stock dropped from around $75 in May 2012 to around $46 in February 2013. Since then, the stock has been steadily rising and has now reached a level of around $55. But the stock still seems to have some upside potential and is expected to rise in future because of certain factors discussed below.

Growing Chinese luxury marketChina's contribution to the global luxury market has been discussed a lot. According to McKinsey Co., China accounts for more than a quarter of the global luxury market. This is expected to further increase to a share of around onethird by 2015. and European luxury brands to increase their revenue, despite slow growth in their respective markets. The European luxury goods sector is expected to expand at a rate of 67% over the next five years. This would be driven by rising demands in emerging markets, especially China.

Coach has more than 110 stores in China. It announced an increase of sales by 40% in the last quarter with a double digit increase in same store revenue. The full year guidance for sales in China has been increased to $425 million from $400 million previously. Chinese market is therefore a big factor in the company's growth plans.

Expanding product categoriesCoach has been implementing its strategy to become a lifestyle brand by moving further into the segments where it is not a major player. It is now diversifying into segments such as shoes and clothing. It has also been trying to expand both its men's product category and its licensing opportunities. The revenue from men's business is expected to double to reach $600 million per year. The company now offers its men's offerings in more than 600 locations globally. This is being done to compensate for the falling sales in North America, which is by far the biggest market for the company. This will help the company in increasing its customer base and therefore presents an upside potential in future.

Financial PerformanceCoach has recently released its Q3 2013 financial results. The company's sales increased 7% to $1.19 billion, beating the consensus estimate by $0.01 billion. Net income also increased by 6.1% to $238.9 million. This resulted in an EPS of 84 cents a share, beating the consensus estimate of 81 cents a share. The company saw its sales increase by 7% in North America. Gross margins also increased to 74.1% from 73.8%. This indicates that Coach didn't drive up sales by compromising on margin. This robust financial performance suggests that the company's strategy to expand and diversify has started to show results.

Dividend growthThe company has recently announced a 13% increase in its annual dividend to $1.35 a share. This resulted in an absolute increase in dividends by 15 cents a share. The current dividend yield is around 2.4%. This dividend yield is higher than all its competitors. With an annual increase in its dividend, this is expected to further increase. The dividend payout ratio is also high at 31%. This indicates that the company believes in giving back to the shareholders for their investment. The company has also been repurchasing shares at around 5% per annum. Since 2003, the number of shares outstanding has decreased by 89 million, or 24%. This has given its investors even higher returns. It is also an indication of the company's robust cash flows.