Coach, Inc. (COH): Compelling Reasons to Sell This Retailer

Global economic concerns
In addition to its brand woes, Coach is also at the mercy of the global market. With slowdowns expected in Europe and China, Coach — and other luxury retailers — may be in for a rude awakening. Just last week, the head of the International Monetary Fund said that Europe “could be entering a softer patch.” Coach may have made an especially poorly timed move, as it recently bought the other 50% of its European joint venture. That exposure may come at just the wrong time.

Stalwart luxury retailer Tiffany & Co. (NYSE:TIF) is also seeing some issues in Europe. While comparable sales rose 4% last quarter, the company estimates that a full 25% of its European sales are from tourists. That’s going to be an issue if the China slowdown continues, as many analysts have predicted. Coach, Inc. (NYSE:COH) may suffer from the same issues, and its expansion into China certainly won’t be helped.

The combination of the global slowdown and the emergence of new, trendier brands puts Coach in a difficult place. The company has had three major focuses recently: Asia, menswear, and footwear. While I still hold out hope that the brand can generate new revenue and attract new customers with all of those programs, success no longer seems straightforward.

The article Compelling Reasons to Sell This Retailer originally appeared on Fool.com and is written by Andrew Marder.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Coach. The Motley Fool owns shares of Coach.

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