Coach crushed on disappointing earnings
The luxury handbag maker couldn't meet expectations in its recent quarter. Shares fall 15%.
Not only did the the luxury retailer's fiscal third-quarter earnings get released early Wednesday to Women's Wear Daily, they were a huge disappointment to boot. Wall Street wasn't pleased and shares of the New York company plunged 15%.
The high-end handbag maker reported a profit of $352.7 million, or $1.23 per share, compared with $347.5 million, or $1.18, a year earlier. That was a nickel under Wall Street expectations. Revenue rose 4% to $1.5 billion, below the $1.6 billion analysts had forecast. Coach clearly expected to do better.
In the earnings press release, CEO Lew Frankfort said the holiday season in North America proved challenging. "Most broadly, the consumer was impacted by a muted macroeconomic environment, while in the women’s handbag category, competition intensified and promotional activity increased," he added.
Coach is not the only luxury retailer feeling the pain of the 1 percenters. Cie. Financiere Richemont SA (CFR), owner of Cartier and Montblanc, reported disappointing earnings Tuesday and gave a cautious outlook. Tiffany (TIF) is also in Wall Street's doghouse after reporting worse-than-expected results.
Consumer confidence plunged in December over fears that the U.S. economy would go over the fiscal cliff. Though that calamity was avoided, investors remained worried about the fight over the debt ceiling.
Congress is well aware of these concerns. The House of Representatives Wednesday is set to vote on a measure to extend the government's borrowing capacity to fund its operations for three months. According to the Associated Press, the bill has the "tacit support" of President Obama.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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