Sandbagged by Guidance

 | Oct 22, 2013 | 3:30 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:




Is Coach's management sand-bagging (pun intended) sales guidance?

While Coach's (COH) comps were exceptionally bad this quarter -- -6.8% vs. estimates of -3.5% -- management's guidance really forced the wheels off the stock. The company now expects comp declines for the remainder of the year in the high-single-digit range. Previous guidance was for negative low-single-digits. Remember, comparisons get easier throughout the year.

Management might believe they are setting the bar low, but here are a few reasons why the bar may go even lower: 

    1. Coach comps are running a 32% spread as compared to Michael Kors Holdings (KORS) -- yes, the market share story continues. (See By Chloe, Marc Jacobs, Tory, Kate Spade, Anya Hindmarch are also piling on.)
    2. Management suggested the category moderated this quarter. Yes, it did and Coach's comps seem to be the entire culprit based on some simple assumptions.
    3. Coach continues to be identified as a factory outlet brand and that never helps sell full-price bags at retail (non-factory outlet) stores.
    4. Factory will be even more promotional this quarter. That may help comps but watch out, as margin guidance was lowered this quarter. I'm not sure the Street is ready for a sales story at the expense of margins.
    5. Until Coach sees the light and stops with the new store openings, The Street may continue to cringe at its quarterly results.
    6. The international  response has been underwhelming, yet the company is forging ahead with really pricey real estate commitments.

Lew Frankfort, who has served as the company's chairman and CEO since 1995, conducted his last conference call today. His last words to investors were "stay tuned." We can't help but wonder if Frankfort has impeccable timing

Columnist Conversations

As far as TSLA is concerned, I still have a higher target above the market at the 409 area.  I stated in ...
The TLT setup discussed in my last commentary is a bust. Key support was violated and it violated the recent l...
BBY is getting smoked this mornings(weak forecast).  The stock is off 8% after opening the session with a...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.