Coach and Disney Plan to Launch Mickey Mouse Collection

Coach (COH) has a market cap of $10.5 billion. It fell by 2.0% to close at $37.85 per share on June 10, 2016.

The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.5%, -0.01%, and 17.7%, respectively, on the same day. This means that COH is trading 1.8% below its 20-day moving average, 3.6% below its 50-day moving average, and 11.6% above its 200-day moving average.

The ALPS Sector Dividend Dogs ETF (SDOG) invests 2.0% of its holdings in Coach. This ETF tracks an equal-weighted index of the five highest-yielding S&P 500 securities in each sector. The YTD price movement of SDOG was 14.0% on June 10, 2016.

The market caps of Coach’s competitors are as follows:

• Estee Lauder Companies (EL) – $33.8 billion
• Ralph Lauren Corporation (RL) – $7.9 billion
• Michael Kors Holdings (KORS) – $8.8 billion

Disney x Coach, a collection featuring Mickey Mouse designs on Coach leather goods and ready-to-wear fashions, will launch at the Coach store in Manhattan’s SoHo neighborhood and at Colette in Paris, France. This collection will be launched on Coach’s website and in Coach stores worldwide on June 17, 2016.

Coach reported fiscal 3Q16 net sales of $1.0 billion, a rise of 11.2% from $929.3 million in fiscal 3Q15. It opened two stores in North America, two in Japan, four in Greater China, two in the rest of Asia, and two in Europe in fiscal 3Q16. This quarter, it also opened one Stuart Weitzman store globally.

Coach’s net income and earnings per share rose to $112.5 million and $0.40, respectively, in fiscal 3Q16, from $88.1 million and $0.32, respectively, in fiscal 3Q15.

Coach’s cash and cash equivalents and short-term investments and inventories fell by 16.0% and 4.3%, respectively, in fiscal 3Q16 from fiscal 4Q15. Its current ratio rose to 3.1x and its debt-to-equity ratio fell to 0.78x in fiscal 3Q16 from 3.0x and 0.87x, respectively, in fiscal 4Q15.

Coach (COH) has made the following projections for fiscal 2016.

• It expects its Coach brand revenue growth in the low single digits in constant currency terms on a 52-week basis.
• Foreign currency should hurt revenue growth by 2.3%–2.5%.
• It expects the Coach brand’s operating margin to be in the mid-teens to high teens.
• It foresees an interest expense of ~$30 million.
• It expects a tax rate of ~28%.

These projections don’t include pre-tax charges for the following:

• transformational plan of ~$50 million
• Stuart Weitzman acquisition charges of ~$30 million
• charges related to operational efficiency initiatives

Coach expects the 53rd week in fiscal 2016 to contribute $75 million–$80 million in incremental revenue and $0.06 in earnings per share.

Next, we’ll take a look at Ford Motor Company.