Coach warned in June that it expected revenue to fall by a double-digit percentage for fiscal 2015 and next year it would close 70 underperforming stores. Coach CFO Jane Hamilton Nielsen told investors that fiscal 2015 is "the invest and reset year, largely is a function of our reduced promotions and store closing activity, we expect to see low double-digit revenue decline."
Shares of Coach are down 37% this year, and shares were off 2% to $33.85 on Friday.
The showdown between the two retailers heats up next week when they report earnings.
Michael Kors, which reports Monday morning, is expected to post earnings growth of 33% year over year to 81 cents a share for its fiscal first quarter. Revenue is expected to rise 34% to $861 million, according to consensus estimates tallied by Thomson Reuters. Kors warned at the end of May that gross margin in the first quarter would be slightly lower than last year. Management gave first-quarter guidance between 78 cents and 80 cents a share.
Coach is expected to report on Tuesday an earnings decline of 41% year over year to 53 cents a share for its fiscal fourth-quarter earnings ending in June. Revenue is expected to drop 11% to $1.09 billion, according to consensus.
Same-store sales are also starkly different between the two retailers. Quarterly comparable store sales at Kors are expected to rise by 20.3%. On the other hand, consensus estimates predict Coach's comps to fall by 21%, according to Consensus Metrix.
"Keep in mind as KORS continues down its path of expanding its distribution, it will likely put continued pressure on COH," Wells Fargo Securities analyst Paul Lejuez wrote in a July 31 research note.
--Written by Laurie Kulikowski in New York.