) seems to be failing to impress investors, as shares of this
textile-apparel retailer have slumped 23.4% since it posted its
third-quarter fiscal 2014 results on Apr 29, 2014. Moreover, the
company's shares have tanked 36.9% year to date, reaching a 52-week
low of $34.31 on Jun 20.
Coach is losing 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 Limited
Kate Spade & Company
) 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 quarter.
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 results.
Additionally, Coach witnessed lower footfall in stores, while
online results were unfavorably impacted by its decisions to
eliminate third-party events, and restrict the accessibility to
factory flash site.
This Zacks Rank #3 (Hold) stock has long-term earnings growth
expectation of 11.3%, which is relatively lower than the peer group
average of 13.2%, depicting inherent weakness.
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 year.
A better-ranked stock in the same industry that warrants a look
with a Zacks Rank #1 (Strong Buy) include
Vince Holding Corp
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COACH INC (COH): Free Stock Analysis Report
MICHAEL KORS (KORS): Free Stock Analysis Report
VINCE HOLDNG CP (VNCE): Free Stock Analysis
KATE SPADE&CO (KATE): Free Stock Analysis
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