Coach began its turnaround strategy earlier than its competitor, Michael Kors.

As Michael Kors Holdings Ltd. and Coach Inc. battle it out to see who wins the race to become the top American global luxury fashion conglomerate, they still have to face the issues weighing down the women’s handbag market in the U.S.

That’s because both are primarily accessories firms, with their core business in handbags and small leather goods in a changing U.S. retail backdrop. As for which company’s stock might make for the better investment, two Wall Street analysts right now prefer Coach.

Shares of Coach closed down 0.6 percent to $48.23 in Big Board trading. The company reports fourth-quarter and full-year results on Aug. 15. Kors shares, meanwhile, closed up 2.3 percent to $35.72, also on the Big Board. Kors posts its first-quarter results on Tuesday.

In discussing the agreement Michael Kors inked on Tuesday to acquire Jimmy Choo for $1.35 billion, chairman and chief executive officer John D. Idol acknowledged that the luxury handbag market is “essentially flat to up a point or two.” He said the deal for Choo, which is expected to close in the third quarter, would give the firm a boost in the luxury footwear market for men’s and increase Kors’ overall footwear business up to 17 percent of revenues from 11 percent. The company said the acquisition would be dilutive until 2020, when it expects to see accretion, although it left open the possibility of incremental gains sooner through back-office synergies.

Instinet analyst Simeon Siegel kept his “buy” rating on shares of Kors. He said accretion to net income could occur earlier, with “synergy upside likely.”

Most analysts have shares of Michael Kors at “neutral,” or “market perform.” Dana Telsey at Telsey Advisory Group kept her “market perform” rating “given our neutral view of the Choo acquisition,” and because the “underlying Kors brand itself remains a work-in-progress from a fashion perspective.” Telsey also described the visibility into earnings trends as “difficult,” noting that while the company recognizes it needs to improve its fashion innovation, Kors has been working for some time to overhaul its distribution and promotional strategies. Her stock preference is Coach, as “we see the ability for ongoing share gains from a reinvigorated brand perception, while accretion from the Kate [Spade] acquisition can remain a catalyst over the next several months.”

Coach earlier this month closed on its $2.4 billion acquisition of Kate Spade & Co. In comparison to Michael Kors, Coach also was earlier in shifting gears to turn around its business, and is therefore much further along in transitioning consumers to the idea of fewer promotions. Moreover, Coach in 2015 made its first deal in acquiring Stuart Weitzman for $574 million and, given that successful integration, is credited for having a proven track record on the acquisitions front — although at the time Wall Street wasn’t so thrilled with the purchase. While Kors can bring to the table some benefits for Jimmy Choo, the U.S. company still has to prove its ability to integrate and execute since Choo is its first brand acquisition.

Mark R. Altschwager at Baird Equity Research also kept his “neutral” rating on shares of Kors. He said while there are “virtues” in the company following a multibrand strategy, “our initial enthusiasm [on the Jimmy] Choo acquisition is tempered,” due to the premium acquisition multiple of 17.5 times and the ongoing Michael Kors reset efforts for its brand.

Cowen & Co.’s Oliver Chen has a “market perform” on Kors’ shares. While he called the Choo deal “transformative,” he also noted that “rapid expansion” is required because it is an expensive deal. And while footwear is the fastest-growing luxury sector, Chen noted that the category “does carry generally lower margins and greater inventory requirements given sizing needs.”

But given a choice between the competitors in the handbag space, Chen also reiterated his firm’s “outperform” rating for Coach shares, with the price target raised to $53 from $49. While he predicted that growth in the handbag category will remain flat, he said of Coach, “[W]e like visibility into steady momentum, the multibrand modern luxury business model, and we believe Coach will do a good job executing Kate Spade synergies.”

In his firm’s latest Cowen Consumer Tracker Survey from last month, Chen said, “Coach continues to maintain overall popularity, but Michael Kors remains the most loved brand among Millennials.” A look at the data shows that 34 percent of the respondents stated a preference for Coach over Kors, compared with a 25 percent response rate from those who said they preferred Kors instead of Coach. And among those who buy at least four handbags a year, 39 percent said they prefer Coach to Kors. That’s compared to 30 percent who preferred Coach (over Kors) in March, and 30 percent who indicated a preference for Coach in June 2016. Among respondents between ages 18 and 34, 35 percent indicated a preference for receiving a Kors bag as a gift, compared with 23 percent who said they would like a Coach bag.

But perhaps troublesome for both brands — given that Coach and Kors are growing their online businesses — is the data analytics from comScore. Chen noted that his team’s analysis of the comScore data from April to June shows a slowdown in digital traffic. Coach.com traffic was soft with a three-month average of down 33.3 percent, led by a decline in mobile traffic of 42.4 percent year-over-year. At Kors, the company saw a deceleration in overall digital traffic with the number of unique visitors to michaelkors.com falling 25.7 percent from April through June, driven mostly by a 28.7 percent decline in desktop traffic.

Chen said his firm’s proprietary consumer data suggests that the Kors brand could be losing digital traffic to Amazon, with 13 percent stating they bought a Kors bag on Amazon in the past 30 days versus 10 percent of participants a year ago. In comparison, only 9 percent said they bought a Coach bag on Amazon during the same time period, a slight dip from the 10 percent reported a year ago.

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