Why Coach (COH) Is Down Today

NEW YORK (TheStreet) -- Coach (COH) was falling 6.98% to $48.83 at midday on Wednesday after the company reported second-quarter earnings that fell short of analysts' expectations.

The luxury brand reported a 9% drop in North American sales, which fell short of analysts' estimates on profit and revenue and brought down the company's second-quarter results. Coach reported second-quarter revenue of $1.42 billion, which marked a 6% decrease from the same period in the fiscal year 2013 and missed the analyst consensus of $1.5 billion.

Profit also fell from the same period last year to $297 million, or $1.06 a share, from $353 million, or $1.23 a share. This fell short of analysts' expectations of $1.11 a share.

"We continued to be disappointed by our performance in North America, which was impacted by substantially lower traffic in our stores and by our decision to limit access to our e-factory flash sales site," said new CEO Victor Luis in a company statement.

Sales in China, on the other hand, rose approximately 25% and Coach is on schedule to meet its annual guidance of $530 million in the region, according to the report.

TheStreet Ratings team rates Coach a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate COACH INC (COH) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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