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One-on-One with Coach CEO Lew Frankfort

Cramer is always reminding Home Gamers how important it is to watch his interviews with CEOs and look for confidence. Often, if a company’s chief looks confident in their company, you can be confident in its stock.

Back in May 2006, Lew Frankfort of Coach came on Mad Money to talk with Cramer. Back then Coach was trading just under $30. Since the interview, the stock is up 48.7%, and investors would have nearly caught a double if they were in COH all the way to its peak at $54 this past April. Since then, though, Coach has cooled a bit, and Cramer doesn’t know why. So Frankfort joined him again in studio to tell him if anything has changed in the 16 months since his first appearance.

Coach is the ultimate metaphor for the high-end retailer, Cramer said, and some analysts believe that the high end isn’t selling in this economic slowdown. In addition, department stores – where Coach sells much of its product – are not faring well, either. But Frankfort doesn’t think the performance of department stores like Macy’s is indicative of his company's performance. In fact, within Macy’s itself, Coach’s business is growing at about a 30% clip, he said.

Coach recently held its first analyst meeting – perhaps a sign of management’s concern about the stock price. Frankfort said he felt it was for different reasons, namely that the meeting was “long overdue,” and was held to “give investors the opportunity to get more under the covers” and see how the company’s management operated.

Frankfort also explained to Cramer that the strategy behind Coach’s move into the fragrance and jewelry space – a decision that carries some risk to the company as it falls outside the retailer’s dominant area of expertise in handbags – came from customer demand. Coach-brand fragrances and jewelry are simply “at the top of the list of what our customers want,” Frankfort said.

As for the stock, Frankfort said he believes the price will “find its natural level,” and he is focused on the company’s business results. And he dismisses the idea that an economic slowdown is keeping high-end shoppers out of his stores: “Our customers are alive and well and shopping as they did in the past.”


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