NEW YORK — Coach Inc. shares underwent a 2-for-1 stock split before the market opened Friday and then benefited from the best performance the major indices produced in months.
This story first appeared in the July 8, 2002 issue of WWD. Subscribe Today.
After closing at $50 Wednesday, and accounting for the split, Coach shares rose 81 cents, or 3.2 percent, to close at $25.81 in abbreviated end-of-the-week trading on the New York Stock Exchange. Volume was below average and the healthy increase pushed the New York-based leather goods maker’s market capitalization up to $1.15 billion.
Since being spun off from Sara Lee Corp. in Oct. 2000, Coach shares have performed well, more than doubling their price of $20.31 at close on the day of the initial public offering Oct. 5, 2000. Sara Lee had owned Coach since 1985.
Financial analysts say stocks usually climb after they split because investors see the move as a sign that a company is financially vital and looking forward to further growth. But analysts are often bemused by the uptick because nothing in the fundamentals of the company has changed to justify the higher price.
However, splits do make shares more accessible to smaller investors, and a number of apparel retailers, including Dress Barn, J. Jill, Wet Seal and Ann Taylor, have split their stocks this year, even though the market as a whole has been trending downward.
Overall in the U.S. markets, bargain hunters shrugged off a tepid employment report to push the Dow Jones Industrial Average to its largest point gain of the year. The NYSE soared 324.53 points, or 3.6 percent, to close at 9,379.5, well above the psychologically important 9,000-point plateau.
The Nasdaq also added value on strong gains in the technology sector, shooting up 68.19 points, or 5 percent, to close at 1,448.36. The broader Standard and Poor’s 500 rose 35.03 points, or 3.7 percent, to close at 989.03.
The Dow has not seen such a large one-day point gain since last Sept. 24, when it rose 368.05 in the aftermath of the closure and then severe declines that followed the Sept. 11 terrorist attacks. In terms of points, it was the Dow’s 10th best day in history.
Investors ignored the Labor Department’s report that the nation’s unemployment rate increased to 5.9 percent in June and embraced the fact that no major incidents occurred on Thursday’s Fourth of July holiday.”