Coach Inc., the largest U.S. luxury handbag maker, tumbled as much as 17 percent in early trading after reporting fiscal fourth-quarter revenue that trailed analysts’ estimates amid slowing North American sales growth.
Coach fell 16 percent to $50.75 at 7:55 a.m. in New York after declining to $50.32. The shares had dropped 0.8 percent this year through Monday.
Sales at North American stores open at least a year advanced 1.7 percent, compared with a gain of 10 percent a year earlier. Jennifer Davis, an analyst at Lazard Capital Markets, projected an increase of 5 percent. Coach, facing competition from Michael Kors Holdings Ltd. and brands such as Tory Burch and Kate Spade, is working to attract consumers who have curbed spending on discretionary purchases amid slow economic growth.
“People are disappointed with the North American comparable sales,” Davis said in a telephone interview. “The slowdown exacerbates concern that Coach might be losing market share in the U.S.”
Davis, based in New York, recommends buying the shares.
Coach’s revenue in the quarter ended June 30 advanced 12 percent to $1.16 billion, the New York-based company said today in a statement. Analysts projected $1.2 billion, the average of estimates compiled by Bloomberg.
Coach said “an increasingly promotional environment” prompted slower-than-expected growth at its factory outlets. The company reinstituted discount coupons late in the quarter.
Net income in the quarter rose 24 percent to $251.4 million, or 86 cents a share, from $202.5 million, or 68 cents, a year earlier, Coach said. Analysts projected 85 cents a share, the average of 26 estimates compiled by Bloomberg.
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