Why Coach Stock Just Plunged 15%



Coach’s stock plunges on glum guidance

Coach’s (COH) stock price crashed after it reported its fiscal 4Q17 results on August 15, dropping 15% on guidance that fell short of Wall Street expectations.

For fiscal 2018, Coach predicted total sales of $5.8 billion–$5.9 billion, compared with the analyst expectation of $6 billion. EPS (earnings per share) expectations stood at $2.35–$2.40, compared with the analyst expectation of $2.49 per share for fiscal 2018.

The revenue increase is likely to be driven by a low-single-digit organic growth and the Kate Spade acquisition, which is expected to add ~$1.2 billion in total revenue. Analysts had been a bit more optimistic about fiscal 2018, now that Kate Spade would be in Coach’s stable.

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Coach’s stock performance

Coach had been looking at YTD (year-to-date) returns of more than 35% before its fiscal 4Q17 results. Now, it’s YTD gains have been reduced to ~16% after.

Still, the company continues to be among the best-performing stocks of the seven-company S&P 500 Apparel and Accessories Index, which has risen 7.4% YTD.

Coach continues to outperform competitors Michael Kors (KORS), which has seen YTD gains of 2.4%, and Ralph Lauren (RL), which has seen YTD gains of -6%. PVH Corporation (PVH) and VF Corporation (VFC) have delivered better YTD returns of 37% and 20%, respectively.

Investors looking to invest in Coach through ETFs can choose the PowerShares S&P 500 Minimum Variance Portfolio (SPMV). Coach has a weight of ~1.1% in SPMV.


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