Coach Earnings: Here’s Why Investors are Cashing Shares

Coach Inc. (NYSE:COH) was profitable and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The profit and revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 15.02%.

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Coach Inc. Earnings Cheat Sheet

Results: Net income increased 1.53% to $352.8 million ($1.23 per diluted share) in the quarter versus a net gain of $347.5 million in the year-earlier quarter.

Revenue: Rose 3.54% to $1.5 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Coach Inc. reported adjusted net income of $1.23 per share. By that measure, the company missed the mean analyst estimate of $1.28. It missed the average revenue estimate of $1.6 billion.

Quoting Management: Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc. said, “During the holiday quarter we drove modest growth and continued to gain overall traction on our key strategies. We posted strong international results, leveraged the Men’s opportunity globally and strengthened our digital capabilities. However, we were disappointed by our performance in North America, where the holiday season proved challenging. Most broadly, the consumer was impacted by a muted macroeconomic environment, while in the Women’s handbag category competition intensified and promotional activity increased. Importantly, we maintained our pricing strategies despite the retail climate, protecting our brand proposition…

…Over the last decade we have built Coach into a leading international accessories company with a loyal and highly engaged consumer franchise. Our customers recognize the Coach brand for its authenticity, innovation and relevance. We’re now transforming Coach into a global lifestyle brand, anchored in accessories. We’ve been strengthening our teams to enhance and build out the Coach experience through product, retail environments and integrated marketing communications. This comprehensive approach will continue to add excitement and cachet to the brand.”

Key Stats:

Revenue increased 29.16% from $1.16 billion in the previous quarter. Net income increased 59.36% from $221.38 million in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.86 and has not changed. For the current year, the average estimate has moved down from a profit of $3.88 to a profit of $3.87 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)