) appears to be in a difficult situation as the company's shares
have plunged 22.8% since it posted dismal third-quarter fiscal 2014
results. Moreover, its shares have tanked 36.5% year-to-date.
The disappointing results triggered a downtrend in the Zacks
Consensus Estimate as analysts become less constructive on the
stock's future performance. Earnings estimates for fiscal 2014 and
2015 have dropped 3.2% and 40.2% to $3.05 and $2.05 per share,
respectively, in the past 90 days.
The textile-apparel retailer lost momentum primarily due to soft
sales, particularly in its North American segment that contributes
the lion's share to the top line. On the contrary, retailers like
Michael Kors Holdings Ltd.
Kate Spade & Co.
) have been filling their coffers with strong sales, thereby
providing stiff competition to Coach.
In its last reported quarter, Coach's sales declined 7% to
$1,099.6 million and also fell short of the Zacks Consensus
Estimate of $1,134 million. This is the second consecutive revenue
decline for the company, following a 6% decrease in the previous
Management stated that torpidity in the North American women's
bag and accessories business offset sturdy growth in men's,
footwear and across the Asian and European markets. Adverse weather
conditions and a shift in the Easter holiday also dampened
Additionally, this Zacks Rank #5 (Strong Sell) company witnessed
lower footfall at its stores, while online results were unfavorably
impacted by its decisions to eliminate third-party events and
restrict the accessibility to factory flash site.
Fashion obsolescence remains a major concern for Coach's
business model, which involves a sustained focus on product and
design innovation. The company's market share could be further
affected by delays in product launches as it operates in the highly
competitive premium handbag and accessories segment.
However, a better-than-expected bottom line is still providing
some cushion to the stock, wherein earnings of 68 cents a share
beat the Zacks Consensus Estimate by 7.9% but tumbled 19% year over
A better-ranked stock in the same industry that warrants a look
Columbia Sportswear Co.
), with a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
COACH INC (COH): Free Stock Analysis Report
MICHAEL KORS (KORS): Free Stock Analysis Report
KATE SPADE&CO (KATE): Free Stock Analysis
COLUMBIA SPORTS (COLM): Free Stock Analysis
To read this article on Zacks.com click here.