), the designer and marketer of fine accessories and gifts and an
S&P 500 company, is slated to report its fourth-quarter and
fiscal 2012 financial results on July 30, 2012.
The current Zacks Consensus Estimate of 85 cents a share for the
quarter reflects year-over-year growth of 25%. The estimates in the
current Zacks Consensus range between a low of 82 cent and a high
of 88 cents a share. The Zacks Consensus revenue estimate stands at
$1,199 million for the fourth quarter.
Third Quarter Recap
Coach posted better-than-expected third-quarter 2012 results.
Quarterly earnings of 77 cents a share beat the Zacks Consensus
Estimate by a couple of cents, and increased 24% from 62 cents
earned in the prior-year quarter, buoyed by strong top-line
The New York based company reported net sales of $1,109 million
in the quarter, up 16.6% year over year and ahead of the Zacks
Consensus Estimate of $1,101 million.
Coach remains optimistic about its dedicated men's stores, and
expects the Men's business to increase two fold to more than $400
million in fiscal 2012 on a global basis. Moreover, management
remains confident of sustaining double-digit growth in both top and
bottom lines in fiscal 2012.
(Refer the article:
Coach Beats, Ups Dividend
Zacks Agreement & Magnitude
For fourth-quarter 2012, out of 21 estimates, one estimate was
revised downwards over the last 7 and 30 days, whereas no upward
revisions were noticed. For the fiscal year 2012, one estimate (out
of 23) was lowered with no upward revision in the last 7 days. In
the last 30 days, one estimate went up while two were trimmed.
For the to-be-reported quarter, the estimate remained constant
at 85 cents over the last 7 and 30 days.
Positive Earnings Surprise History
With respect to earnings surprises, Coach has topped the Zacks
Consensus Estimates over the last four quarters in the range of a
low of 2.6% to a high of 4.6%, with the average at 3.6%. This
implies that Coach has outperformed the Zacks Estimates by the same
magnitude over the last four quarters and we believe that the
company will continue to post better-than-expected results in the
Neutral on Coach
Coach boasts a proven strategy of investing in stores to enhance
sales productivity through product innovation, compelling pricing
strategy, new merchandise assortments and a cost-effective global
sourcing model, which should drive comparable-store sales and
operating margins in the long term.
The company's long-term growth drivers include expansion of its
global distribution model and entry into under-penetrated markets.
The company lays more emphasis on globalization and accelerated
international distribution growth.
Coach maintains a healthy balance sheet with a significant cash
balance and negligible debt load. The company also has been
proactively managing its cash flows by making prudent capital
investments and enhancing shareholder returns. The company's strong
liquidity positions it well to drive future growth.
However, Coach sells products that are discretionary in nature.
Its customers remain sensitive to macroeconomic factors including
interest rate hikes, increase in fuel and energy costs, credit
availability, unemployment levels and high household debt levels,
which may negatively impact their discretionary spending, and in
turn the company's growth and profitability. Therefore, we remain
concerned about erratic consumer behavior and a sluggish recovery
in the economy.
Fashion obsolescence remains another concern for Coach's
business model, which requires sustained focus on product and
design innovation. The company's pioneering position may be
compromised by delays in its product launches.
Coach, which competes with
Polo Ralph Lauren Corporation
), carries Zacks #3 Rank, implying short-term Hold rating for the
next 1-3 months. We maintain our long-term Neutral recommendation
on the stock.
COACH INC (COH): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis
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