Coach Inc. may have managed to beat analysts’ first-quarter estimates, but investors remain skeptical and its stock took another beating on Tuesday.

This story first appeared in the October 29, 2014 issue of WWD. Subscribe Today.

Coach’s shares dropped 6 percent to close at $34 in Big Board trading — and investors couldn’t sell fast enough, with 15.7 million shares changing hands versus a three-month average of 4.2 million. The steep fall in the share price reflected investors’ worries over the continuing weakness in Coach’s core North American market as well as a lack of visibility over the current management’s strategy to reinvent the company as a lifestyle brand.

For the three months ended Sept. 27, net income was $119.1 million, or 43 cents a diluted share, 45.3 percent below the $217.9 million, or 77 cents, reported in the first quarter of fiscal 2014. Excluding actions taken as part of the company’s strategic restructuring efforts, including accelerated depreciation, adjusted earnings per share came in at 53 cents, 8 cents higher than the consensus estimate of analysts at 45 cents.

Sales in the period were $1.04 billion, 9.7 percent below the year-ago level but higher than the $1 billion consensus estimate. Gross margin fell 290 basis points to 68.9 percent of sales from 71.8 percent in the year-ago quarter.

In a telephone interview, chief executive officer Victor Luis emphasized, “We are very much on plan,” noting that the company is meeting its own internal expectations. He explained that the actions related to the Sept. 12 fashion launch of the new Stuart Vevers collection, the new marketing campaign, the store revamping that’s in progress and even the pullback on promotions to a semiannual sales model are all connected with the company’s transformation plan. Between 70 and 75 percent of the inventory on hand before Sept. 12 has been cleared out of the full-price stores, and while investors may be wishing for greater visibility to how the new line is faring sooner rather than later, Luis was quick to point out that the plan is “not a seasonal, one-quarter exercise. It is a multiyear plan and we are in the first innings of doing this.”

Neither Luis nor Francine Della Badia, Coach’s president of North American retail, were able to provide the definitive clarity, or the so-called green shoots, that investors seem to want, particularly given the $37 million in charges for the quarter tied to the firm’s transformation plan. And it didn’t seem to matter to investors that the new lifestyle collection was in stores for just two weeks before the current quarter ended, or that the second quarter is just a month old.

“The North American business is about needing to change brand perception. You do that through customer experience, product and particularly the store’s environment that they are shopping at. We’ve renovated four stores. In our lower Fifth Avenue store [that was renovated], we’ve seen much better comp performance,” she explained.

Della Badia said that in the renovated stores, the company has seen improvement across the board for all product categories. Customers are also transacting multiple purchases each time, buying a handbag and adding an accessory item or an item from ready-to-wear, she noted.

International sales during the quarter helped to boost the accessory firm’s bottom line, gaining 4.4 percent to $381 million, while North American sales fell 18.5 percent to $634 million with comparable-store sales dropping 24 percent.

Luis said the Japanese consumer, its largest international market, tends to favor smaller bags, while consumers in China prefer brighter colors and novelty. Novelty is also what North American consumers are gravitating towards when they buy.

During the conference call to Wall Street, Luis said the company remains bullish on its prospects for its global men’s business and is “continuing to target $1 billion in sales  in 2017.”

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