Coach, Inc. (NYSE: COH) took a 13% dive today as it released its Q4 and full year reports.
A time of restructuring for the brand, Coach has been decreasing sales and closing doors to its less profitable retail spaces in department stores, all in a bid to increase the pomp associated with the brand. This however translates to uncertainty for investors as a decrease in sales follows these tactics, and is partly why the company has seen such a drop in its stock price after posting favorable results. Coach’s earnings in Q4 reached $141.7 million, compared to $126.1 million last year, or $0.50 per share, which beat out the street’s expectation of $0.49. The acquisition of Kate Spade and the improved performance from Stuart Weitzman were not enough to allay investor’s fears.
As it continues to position itself into a more niche market, the shareholders of Coach will continue to feel the uncertainty surrounded by lower sales, the pivot however should yield benefits in the future. The addition of Kate Spade will also help increase the reach of the Coach brand, further driving sales and helping distance the company from its rivals, “We also took a major step in our corporate transformation with the acquisition of Kate Spade & Company, which closed in July, becoming the first New York-based house of modern luxury lifestyle brands. Kate Spade brings a new, unique brand attitude and an additional consumer segment to the Coach, Inc. portfolio and we expect that this acquisition will enhance our position in the attractive and growing $80 billion global premium handbag and accessories, footwear and outerwear market,” according to Victor Luis, CEO.
Though it is slow going for Coach currently, expect it to settle into its more haute role effectively.