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COH Stock: Coach Earnings Confirm It’s Still a Trainwreck

Coach Inc (NYSE:COH) continued its nightmarish ride on Tuesday after the luxury New York, NY retailer posted yet another quarter of miserable sales. COH stock lost as much as 9% in late-morning trading after the announcement.

COH Stock Coach Earnings Confirm Its Still A TrainwreckOver the the past five years, COH stock has significantly underperformed its competitors and the stock market as a whole, with its stock gaining a mere 11% over that period (thanks largely to dividends).

That’s a bad annualized return, but it gets worse when you consider the five-year returns of some fellow luxury retailers:

  • Kate Spade & Co (NYSE:KATE) stock roared almost 300% higher in that time.
  • Michael Kors Holdings Ltd (NYSE:KORS) stock gained 160% — and in less than five years, actually. KORS went public in Dec. 2011.
  • Luxottica Group SpA (ADR) (NYSE:LUX) stock tacked on 154%.
  • Fossil Group Inc (NASDAQ:FOSL) stock rose 104%.
  • The S&P 500 went on a 95% rally.

You get the point. The same problems that plagued COH yesterday continue to haunt it today, and Wall Street is expressing its utter dismay.

Coach’s Terrible, Horrible, No Good, Very Bad Quarter

COH revenue in the fiscal third quarter clocked in at $929.3 million — which was crushingly awful. Sales were down 15% year-over-year, missing analyst estimates, too: Analysts expected sales of $949.9 million in the last quarter.

A revenue miss of that proportion is nearly always enough to send a stock tumbling, but COH wasn’t done yet. It also reported a comically pronounced decline in North American same-store sales, or SSS, the likes of which I’ve rarely seen in my years observing the retail industry. Coach’s North American SSS, which count sales in Coach locations open for at least a year as well as online sales, cratered 23% in the period.

Unfortunately for owners of COH stock, same-store sales are one of retail’s most cherished metrics. It’s also unfortunate for Coach shareholders because it plainly refutes the idea that the handbag maker’s forgettable quarter can be chalked up to currency headwinds. Yes, the strong dollar hurt COH, with international sales falling 3% in the quarter but actually rising 4% on a constant-currency basis.

But North America? I’m sorry, Coach. There are lots of dollars in North America.

If you really make an effort, there are a few silver linings to Coach’s earnings, one of them being, well, earnings themselves. COH earnings per share came in at 36 cents, beating Wall Street estimates by a penny. And, although Coach closed 43 retail stores and 12 outlet stores in North America last quarter, the fact that it’s shuttering underperforming locations is a good sign.

One hopes that the decision to cut down its outlet store locations can create some degree of scarcity and reignite Coach’s once-premium brand that helped the company command some insane margins.

But the numbers don’t lie, and today the numbers are saying, not so subtly, that COH stock is really unfashionable.

As of this writing John Divine was long shares of KORS stock. You can follow him on Twitter at @divinebizkid or email him at

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