Consumer Products

Coach Gets Crushed After Calling 2013 an "Investment Year"

Coach Inc. (NYSE: COH) is getting pounded after its disappointing quarterly earnings of $0.86 per share and $1.16 billion in revenue. The results compare to the Thomson Reuters consensus estimates of $0.85 per share and $1.2 billion revenue. The luxury and upscale accessories company also spent some $169 million to repurchase about 2.5 million shares in the quarter. Gross margin improved to 72.6% from 71.8% in the quarter.

The company is not exactly talking up its outlook as it calls fiscal 2013 an investment year that will result in modest deleveraging. The company is committing to double-digit growth on the top line and bottom line results over the planning horizon.

A key issue is the direct-to-consumer sales as it now includes Taiwan and Singapore, and that rose by 13% to $1.05 billion. Same-store sales rose by about 1.7% in North America, and sales were up 16% in Japan. Sales in China were 60% higher. Indirect sales were flat at $108 million.

Shares of Coach closed at $60.58 on Monday, but shares are down 16% at $50.85 against a 52-week range of $45.70 to $79.70.

Bloomberg was reporting last Friday that put options were trading at the highest premium in quite some time for Coach. Now we know why.

JON C. OGG