Coach shares slide on worries of slow turnaround

Coach shares continued their slide on Wednesday to hit a low not seen since October 2010, following a downgrade from Citigroup that said the accessories firm's transformation would take multiple years.

Although Citi analyst Oliver Chen said he is encouraged by the brand's potential to become a successful lifestyle brand, he changed his rating on the stock to "neutral" from "buy" and lowered his price target to $50 from $56, citing a lack of near-term catalysts to drive the shares higher.

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He listed the company's continuation of negative comparable-store sales and a dependence on more "trend-right fashion" as reasons for caution.

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"Also, in our view, a traffic restoration is tough to expect for any retailer," Chen wrote.

Coach on Tuesday said sales declined 5 percent in the quarter ended March 29, including a dramatic 21 percent same-store sales decrease in North America. It was the fourth-straight quarter of domestic same-store sales declines. The company, known for accessibly priced luxury handbags, said that category continued to be its weak spot, while men's and footwear showed momentum.

Many have pointed to Coach's new creative director, Stuart Vevers, as a potential catalyst for the company, which has lost share to more fashion-forward firms in its category, namely Michael Kors and Kate Spade. With a background at British fashion house Mulberry and LVMH-owned Loewe, the company is betting on his fashion resume to give its products a style boost.

Has Coach lost its cool?
Has Coach lost its cool?

After his appointment, Coach made its debut at New York Fashion Week in February, a move that was applauded by Chen.

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"We do believe Stuart Vevers' product scheduled for September 2014 encouragingly has better focus, can address pent-up demand for important silhouettes previously unrepresented and will position Coach with a more advanced fashion proposition," Chen said.

According to a recent note from Citi, Coach leads the North American handbag category with a 22 percent share of sales. Louis Vuitton is second at 9.2 percent, Michael Kors ranks third, at 9 percent, while Kate Spade comes in eighth at 2.2 percent.

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Coach shares were trading near $44.50 in the late morning, after falling as low as $43.90, a nearly 13 percent slide from Monday's closing price of $50.42.

—By CNBC's Krystina Gustafson.