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Pre-Earnings Report: What We Can Expect from Coach in Fiscal 2Q16

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Coach (COH) to declare fiscal 2Q16 earnings on January 26

Luxury handbag and accessory maker Coach (COH) is scheduled to declare earnings for the second quarter of fiscal 2016 on January 26. The quarter ended on December 31, 2015, and the fiscal year ends in June 2016. The quarter was an important one for Coach, as it included the crucial holiday season. The quarter was also important for Coach to cement the brand on the heels of recently improved performance.

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Management guidance

Coach’s management was upbeat on its potential for the quarter. In Coach’s 1Q16 earnings call, Victor Luis, CEO of Coach, stated “We are excited to see our brand momentum building as we execute on our transformation. We enter the key holiday period confident that we will see continued improvement in our North America comparable store sales, driven by a strong assortment of gifts and new fashion handbags across all channels. In addition, our international businesses, notably in Europe and Japan, will continue to benefit from both strong domestic and tourist shopping trends.”

We’ll analyze management’s take on estimates for fiscal 2016 by the numbers in part five of this series.

Business transformation

Coach, which has been around for around 75 years, has been in the midst of transforming its business model since mid-2014. Same-store sales and revenue had been in decline in fiscal 2014 and fiscal 2015 due to the onset of higher competition from newer rivals Michael Kors (KORS) and Kate Spade (KATE), which were growing same-store sales at a double-digit pace up until their last respective fiscal years.

Read about the elements of the company’s transformation plan and its potential impact on the current quarter in part four of this series.

ETF exposure

COH and KORS together constitute 0.72% of the Consumer Discretionary Select Sector SPDR Fund (XLY). XLY provides exposure to 88 stocks in the consumer discretionary sector. COH and KORS are also part of the S&P 500 Index and together make up 0.09% of the iShares Core S&P 500 ETF (IVV), which invests 23.1% of its holdings in consumer stocks.

In the next part of this series, we’ll take a look at the company’s recent performance.

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