Coach steps into shoes
The luxury accessories retailer has begun a successful transition into footwear and other fashion items.
By Geoffrey Seiler, BullMarket.com
For its latest quarter, Coach (COH) posted a profit of $238.9 million, or 84 cents per share, compared with $225.0 million, or 77 cents a share, a year earlier. While the company is known for its handbags, its first quarter was all about shoes.
The results topped Wall Street forecasts by 4 cents per share. Revenue rose 7% to $1.19 billion, just ahead of the $1.18 billion Wall Street consensus.
The company's conference call certainly confirmed that shoes were selling well. North American Retail President Michael Tucci said, "In March, we relaunched shoes in 170 retail stores in North America."
Tucci explained, "The response from consumers has been extremely positive as the business in these footwear locations went from about 3% to almost 12% of the business."
This is important because that it is solid evidence that the company can transform itself into a full-fledged lifestyle brand and not be solely reliant on handbags, where it has been losing some market share.
Given this, we would be more bullish on Coach despite the big jump in the stock price following the quarterly report.
The stock is still cheap and well off its highs, and if the company can successfully move beyond handbags and into shoes and other fashion areas, then it's looking at a much bigger addressable market, paving the way for a lot of potential growth.
It's still early, but the initial evidence is signaling that the Coach brand is strong enough to make this transition.
More from TheStockAdvisors.com
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.