Hmm. I am not doubting that this info was passed onto OP. I'm just shaking my head at that info as some of it doesn't make that much sense to me. COH is getting a tad beat up by Wall Street lately. Check out the story emerging from Wells Fargo's downgrade yesterday, in fact:
"Wells Fargo reported on Tuesday that it has lowered its rating on gift and accessory producer, Coach, Inc. (COH). The firm has downgraded COH from Outperform to Market Perform, and has given the company a valuation range of $53 to $57. This range suggests a up to -8% decline from the stocks current price of [...]
Wells Fargo reported on Tuesday that it has lowered its rating on gift and accessory producer, Coach, Inc. (COH).
The firm has downgraded COH from Outperform to Market Perform, and has given the company a valuation range of $53 to $57. This range suggests a up to -8% decline from the stocks current price of $57.69. An analyst from the firm commented, while we believe COH remains a well-regarded brand and currently enjoys among the highest ROIC in retail, we are concerned that its new strategic direction (to become a lifestyle brand) at this stage in its life cycle may weigh on margins and returns. Slowing comp trends in both U.S. channels seem likely to continue, especially at Factory stores, where high productivity levels create difficult comparisons.
The part leaving me shaking my head is how they have among the highest ROIC in retail--and then would make such major, major changes to their strategic plans -- esp during a time when the economy is not yet stablized or healthy yet. Think about how Wall Street in general celebrated the news that the FOMC will hold rates steady and not start selling assets...yet, in order to keep the "wealth effect" alive and well with investors. IMO , a major shift like this in a company's strategic plan, during an economic recovery as we are in now, is somewhat equivalent to the Feds selling assets too soon or too quickly. With all that liquidity out there, the Feds don't want to upset the apple cart. Unless Coach thinks they have captured everyone there is to capture, and all the available liquidity (spenders) I just don't get the timing of this, let alone this plan.
Oh well....stranger things have happened. And at times, as a COH stockholder, I equate Coach to a technology that was to thrive but didn't really in a certain sector where they thought it would be hot (Smartboards in public schools). At first, districts snatched up Smartboards but then they sat there with sheets covering them...essentially becoming a technology seeking a purpose. Perhaps Coach is just similar to that now...a retailer (still) seeking a purpose. But maybe gradually, unlike Smartboards. First, the barrage of PCEs--very aggressive marketing. Then, the shift to Legacy and the look of Coach of yesteryear. Then the uniform changes at the boutiques and now outlets. And now...the rest of this plan? All looking like a retailer still seeking a purpose, in my humble opinion.
