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Coach Will Climb...If It Sticks With Women: Analyst

On the heels of Coach's high-end earnings release, Laura Champine, senior retail analyst for Collins Stewart, raised her price target to $71 a share from $67.

"Today Coach has no problems," she said. "They just put up great numbers; a 9 percent [same-store sales] on top of 13 percent [new-store sales] in the U.S. That's beautiful."

Coach said Tuesday that same-store sales rose 8.8 percent in the second quarter. Earnings per share came in at $1.18, three cents higher than estimates, which sent the share price higher Wednesday.

Champine says, however, that to stay problem-free, the luxury retailer should stick to what it does best: Marketing to American women.

"They think that over time men's products can account for 15 percent of their revenues," she said. "It's tough to do a great business in men's leather goods at the higher end, because I just don't think that men in the U.S. are terribly fashion conscious."

She observed: "They don't know the brand of their wallet."

While Coach already operates 152 factory outlets in America, it is expanding into interational markets with more male products, saying Tuesday that this strategy helped boost its second-quarter net income by nearly 15 percent.

"They'll do a great job in Japan and China, they already are. They're adding square footage there," noted Champine. "But the vast majority of Coach is in the U.S., and I don't think that's changing any time soon."

Additional News: Coach's Second-Quarter Income Rises 15 PercentAdditional Views: Are Charts Forecasting Drops in Tiffany, Coach?

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Disclosures:

Laura Champine does not own Coach shares. Collins Stewart does not make a market in Coach and has not received any compensation from the company in the past 12 months.

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