) have been portraying a downtrend since the company posted
third-quarter fiscal 2014 results on Apr 29, 2014. It seems that
analysts have become less constructive on stock's future
performance, which has slipped about 8% since the earnings
This is evident from the movement witnessed in the Zacks
Consensus Estimate that tumbled 2.9% to $3.06 for fiscal 2014 and
14.9% to $2.92 per share for fiscal 2015 in the past 30 days.
The New York-based company disappointed on the sales front that
declined 7% to $1,099.6 million - after decreasing 6% during the
second quarter - due to sluggishness in the North American market,
and also fell short of the Zacks Consensus Estimate of $1,134
Management stated that sluggishness in the North American
women's bag and accessories business offset sturdy growth witnessed
in men's, footwear and strong results across Asian and European
markets. Adverse weather conditions and a shift in the Easter
holiday also impacted the results. Coach witnessed lower footfall
in stores, whereas online results were unfavorably impacted by the
company's decisions to eliminate third party events, and restrict
the accessibility to factory flash site.
Fashion obsolescence remains a major concern for Coach's
business model, which involves a sustained focus on product and
design innovation. The company's pioneering position could be
affected by delays in product launches. It is noteworthy that the
company operates in the highly competitive premium handbag and
However, what is still providing some cushion to this Zacks Rank
#3 (Hold) stock is the better-than-expected bottom-line result,
wherein earnings of 68 cents a share beat the Zacks Consensus
Estimate by 7.9% but tumbled 19% year over year.
We believe Coach's focus on investing in stores to enhance store
sales productivity through product innovation, a compelling pricing
strategy and new merchandise assortments may act as catalysts. The
company remains optimistic about its dual-gender Legacy lifestyle
collection, dedicated men's stores and international growth
opportunities to counter the soft consumer scenario.
Other better-ranked retail stocks that look promising and are
expected to continue with their upbeat performance include
Columbia Sportswear Co.
) all holding a Zacks Rank #2 (Buy).
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