Coach saw its bottom line coming ahead of the Zacks Consensus
Estimate, when it posted second-quarter fiscal 2015 results.
However, what came as a drawback was that the earnings per share
plunged 32.1% from the year-ago quarter hurt by 14.1% fall in net
sales. The company's North American business weighed upon the
company's performance, however, comparable-store sales portrayed a
sequential improvement. Coach now expects sales to decline in low
double-digit on a constant currency basis in fiscal 2015 due to
lower promotion and store closure. We believe a mature domestic
market and cautious consumer spending environment also remain
causes of concern. However, the company has undertaken
transformation initiatives revolving around, product, stores and
marketing to bring itself back on the growth trajectory. Currently,
we maintain our Neutral recommendation on the stock.
Founded in 1941 and headquartered in New York, Coach, Inc. (COH)
is the designer and marketer of fine accessories and gifts for
women and men in the United States and internationally. The Company
offers lifestyle products, which include handbags, women's and
men's accessories, footwear, jewelry, wearables, business cases,
sunwear, travel bags, fragrance and watches.
Beginning with the first quarter of fiscal 2013, Coach operates
under two business segments North American and International.
North American segment includes sales to customers via North
American company-owned stores, including the Internet, and sales to
North American wholesale customers and distributors. The segment
represented approximately 65% of fiscal 2014 net sales.
International segment includes sales via company-operated
outlets (including the Internet) and concession store-in-stores in
Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan,
Malaysia, South Korea, the United Kingdom, France, Ireland, Spain,
Portugal, Germany and Italy, as well as sales to wholesale
customers and distributors in about 35 countries. The segment
represented approximately 34% of fiscal 2014 net sales.
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