On Jan 24, 2014, Zacks Investment Research downgraded
), the maker of handbags, wallets, shoes and other accessories,
to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Estimates for Coach have shown a downtrend since the company
reported second-quarter fiscal 2014 results. The company came up
with disappointing sales that declined 6% to $1,419.6 million -
after dipping 1% during the first quarter - due to sluggishness
in the North American market and also fell short of the Zacks
Consensus Estimate of $1,501 million.
Coach sells products that are largely discretionary in nature
and thereby depend upon consumers' disposable income. Consumers
in turn are highly sensitive to macroeconomic factors. Given the
difficult consumer spending environment in the past couple of
quarters, things have become a little difficult for Coach of
The bottom line also failed to impress investors, as quarterly
earnings of $1.06 per share missed the Zacks Consensus Estimate
of $1.11 and tumbled 13.8% from the prior-year quarter.
Fashion obsolescence remains a major concern for Coach's
business model, which involves a sustained focus on product and
design innovation. The company's pioneer position could be
affected by delays in product launches. It is noteworthy that the
company operates in the highly competitive premium handbag and
The softness in results triggered a downtrend in the Zacks
Consensus Estimates, as analysts become less constructive on the
stock's future performance. This is evident from the movement
witnessed in the Zacks Consensus Estimate that fell 6.6% to $3.24
for fiscal 2014 and 7.1% to $3.54 per share for fiscal 2015 in
the past 7 days.
Other Stocks that Warrant a Look
Other better-ranked retail stocks that look promising and are
expected to continue with their upbeat performance include
G-III Apparel Group, Ltd.
) sporting a Zacks Rank #1 (Strong Buy), along with
Gildan Activewear Inc.
Michael Kors Holdings Limited
), both of which hold a Zacks Rank #2 (Buy).
COACH INC (COH): Free Stock Analysis Report
G-III APPAREL (GIII): Free Stock Analysis
GILDAN ACTVWEAR (GIL): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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