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Coach's Shares Down Over 20% YTD: Is the Slump Justified?

Investors seem to be cautious of Coach, Inc.COH , as shares of this designer and marketer of fine accessories and gifts have plunged approximately 5.6% following its fourth-quarter fiscal 2015 results and roughly 21.7% year to date. The stock is currently hovering close to its 52-week low of $27.62 reached on Aug 24, 2015, just 20 days after the earnings release. Moreover, the stock tumbled 1.8% yesterday, eventually closing trade at $28.40.

The company's dwindling top- and bottom-line results remain the primary concern for investors. A look at Coach's performance in fiscal 2015 unveils that net sales of this New York-based company declined 9.7%, 14.1%, 15.5% and 11.6% in the first, second, third and fourth quarters, respectively. Maintaining the same chronological order, we note that earnings per share fell 31.2%, 32.1%, 47.1% and 47.5%, respectively. A mature domestic market, foreign currency headwinds and cautious consumer spending continue to pose concerns.

It is perhaps evident that there is nothing to hold investors' interest in the stock. However, there is a silver lining that still provides cushion to the stock. Coach delivered its sixth straight quarter of positive earnings surprise with its fourth-quarter fiscal 2015 results. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by an average of 9.6%.

Further, Coach is undergoing a brand transformation and introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman has been accretive to its performance, and is being viewed as a significant step in its efforts toward becoming a multi-brand company. Moreover, the company is on track with its transformation initiatives revolving around products, stores and marketing.

The pros and cons embedded in the stock are well reflected by its Zacks Rank #3 (Hold).

Stocks that Warrant a Look

Better-ranked retail stocks that look promising include Foot Locker, Inc. FL , sporting a Zacks Rank #1 (Strong Buy), American Eagle Outfitters, Inc. AEO and Citi Trends, Inc. CTRN , both carrying a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

COACH INC (COH): Free Stock Analysis Report

AMER EAGLE OUTF (AEO): Free Stock Analysis Report

FOOT LOCKER INC (FL): Free Stock Analysis Report

CITI TRENDS INC (CTRN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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