Luis took the helm at a difficult time for the company, which was having trouble re-defining its luxury brand after issuing cheaper products that drove away wealthier customers.
"If you want to sell expensive handbags, you need people to believe that they're going to be exclusive, but Coach had lost what we call 'the aspirational touch,'" Cramer said. "So when Luis came in, he immediately outlined a major overhaul of the business."
Luis refined Coach's product line, shuttered under-performing stores, remodeled existing stores and installed shop managers at department stores that sold Coach products.
But the CEO's first major change came when the company bought Stuart Weitzman, a luxury shoemaker that gave new life to Coach's growth prospects.
Coach started seeing Luis' changes reflected in the numbers by early 2016, but even with improvements, the company was subject to doubt, including a downgrade to "underweight" by Morgan Stanley analysts who argued Coach was too promotional and would sacrifice its margins in the process of talking up its brand.
Cramer defended Coach when the downgrade came, and sure enough, the stock has caught fire, only to be bolstered by Coach's planned acquisition of Kate Spade, which it announced in May.
However, less than a week before it announced the Kate Spade deal, Coach reported an earnings beat and saw its stock rally 11 percent on the news.
"So it's not like Coach needed to do a deal — Wall Street was already plenty interested in the stock regardless," Cramer said. "Still, on May 8, we learned that Coach would buy Kate Spade for $2.4 billion, or $18.50 a share. Here, we got a sense of Luis' new vision: he wants to create a house of modern luxury lifestyle brands."
Cramer likes the idea of Coach, which has a more professional, polished look to its products, acquiring a more millennial-focused brand. Coach also has plans to build Kate Spade's brand awareness both at home and overseas, provided the company can orchestrate a good international roll-out.
"Coach believes they can generate $50 million in synergies within three years after the deal closes, and they plan to do many of the same things to Kate Spade they already did to themselves: reduce its department store exposure, stop diluting the brand by participating in so many online flash sales," Cramer said. "Put it all together, and management believes Kate Spade will give them [a] double-digit earnings boost by next year. Coach's stock has continued to roar since the announcement, which tells you all you need to know about how the market sees this deal."
While the stock of Coach may seem expensive, with shares trading at 19 times 2018 earnings estimates, Cramer said the company's rising same-store sales and margins are worth the premium.
"Not only is the turnaround at Coach still very much on track, the company's taking the comeback that it made, the expertise, and applying it to Kate Spade, and I think that acquisition can fuel still another leg of this phenomenal welcome-back rally," the "Mad Money" host said. "Ideally, sure, you'd want to wait for a pullback before you buy it, but you know what? If you don't already own some Coach, I'm going to give you my permission to put on a small position here."
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