Boston, MA 08/07/2014 (wallstreetpr) – Coach Inc. (NYSE:COH) Investors were jubilant earlier in the week after the company posted better than expected quarterly profits that beat estimates despite a sales dip of 7.1%. It goes without saying that the 73-year-old company is still trying to recover from a rookie mistake that saw it opening numerous outlets across the U.S., filling them with cheaper CC logo bags a move that has for some time hurt the company’s topline.
Women’s Hand Bags Underperforming In The U.S
Founder of SageBerry Consulting LLC in Dallas, Steven Dennis, believes that the rookie mistake was a typical case of brand mismanagement that allowed the chain store to lose focus on its core business. A lot of mistakes according to Dennis were made that have consequently tarnished the brand. The positive on the other hand is the fact that an increase in sales for men’s goods as well as increasing demand in China helped a great deal in offsetting slumping sales in the U.S especially for women’s bags
Coach fierce rival Michael Kors Holdings Ltd (NYSE:KORS) on the other hand looks to be having a pretty good run in the market after recording yet another quarter of double-digit growth in sales. The growth of sales in For Michal Kors essentially shows that American women still have an appetite for pricey leather bags as opposed to cheaper options currently offered by Coach Inc. (NYSE:COH). Another sign of trouble for Coach is the fact that its gross margin shrunk to 69.4% from 73%, a year earlier in the quarter.
Coach Transitioning Into A Lifestyle Brand
Coach Inc. (NYSE:COH) fourth quarter capped a disappointing year especially in North American women’s bag business according to its CEO, Victor Luis, who also pointed out bright spots after surpassing $500 million worth of sales in China as well as the hiring of a new creative director. Coach is reportedly trying to transition into a lifestyle brand by selling everything from shoes to outwear, a move that many analysts remain skeptical about, especially on the fact that it does not have a namesake founder like a Kate Spade & Co (NYSE:KATE).
