On Mar 8, 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 the consumers' disposable income.
Consumers in turn are highly sensitive to the macroeconomic
factors. Given the difficult consumer spending environment in the
past couple of quarters, things have become a little difficult
for Coach of late.
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 8.6% to $3.17
for fiscal 2014 and 9.4% to $3.45 per share for fiscal 2015 in
the past 60 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
Michael Kors Holdings Limited
) both carrying a Zacks Rank #1 (Strong Buy), while
G-III Apparel Group, Ltd.
) sports a Zacks Rank #2 (Buy).
COACH INC (COH): Free Stock Analysis Report
G-III APPAREL (GIII): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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