The New Fuss About Michael Kors

As Coach Momentum Softens

Remember when Coach Coach was the fashion growth stock you had to own a few michael kors years michael kors ago on the heels of international growth?

That growth story paid off handsomely if you invested in it. michael kors From the March 2009 michael kors michael kors lows near $11.50, Coach shares returned nearly 7 times in the three years to March 2012. But the story started michael kors to go south a year ago and it hasn't gotten much better lately.

Ahead of michael kors Coach's FY fourth quarter report last week, analysts were already taking earnings estimates michael kors down and this forced Coach shares to michael kors michael kors earn a Zacks 4 Rank (Sell) on July michael kors 16.

Then following Coach's report on July 30 which took the stock down over 8% from $58 to $53, more analyst downward revisions to the earnings outlook handed the company a Zacks 5 michael kors Rank (Strong Sell) michael kors on August 1.

North American michael kors Sales, which account for 63% of Coach's total sales, were the major factor behind this setback. Same store sales declined by 1.7% in michael kors the latest quarter.

michael kors The drop in sales of women's michael kors handbags in the North michael kors American region is at the michael kors root of the company's problems. And this was not an isolated event as a fall michael kors in comparable store michael kors michael kors sales michael kors occurred for the second michael kors time in three quarters.

The Zacks proprietary Price Consensus chart below tells the tale of michael kors a steadily deteriorating michael kors michael kors profit outlook for the past michael kors year, that picked up downward momentum into July.

It seems the company has lost some ground to young shoppers who are michael kors well informed about current fashion trends. The company's executives accepted this criticism michael kors on the michael kors conference michael kors call. In fact, Coach expects only a low double digit percentage increase in sales of handbags and accessories in North America.

With aggressive, youth oriented designers michael kors to compete with like Vera Bradley Vera Bradley michael kors and Michael Kors, the handbag wars are taking their michael kors toll on the more staid Coach designs.

michael kors And the situation has been compounded by the departure of several key managers. President for North America Mike Tucci, a ten year michael kors veteran, and chief operating officer Jerry Stritzke (5 years) michael kors said they will be quitting the company next month.

Such departures michael kors are a matter michael kors of deep concern as the company tries to reposition itself michael kors as a lifestyle brand michael kors and attempts to expand into clothing, jewelry and shoes.

While the appeal michael kors of the Coach michael kors brand and the company's staying power michael kors in fashion are not in question, the current sales outlook certainly is. The company may have some re invention michael kors to do michael kors to regain the hearts and minds of the fashionistas and that will take time.

In the meantime, michael kors just watch the Zacks Rank to tell you when Wall Street retail analysts who intensely follow all these companies michael kors and trends have decided the comeback is for real. Their upward revisions to earnings estimates will show up and make the stock a buy again.

Until then, Michael Kors michael kors appears to be running away with their customers. In full disclosure, I don't follow fashion trends and retail stocks intensely. But I do own michael kors two Kors ties, and the stock.