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Ho-ho-hum holiday for handbags

A woman's handbag is among her most important accessories, which is why it's such a challenge, and a victory, to score the sale when she's ready to purchase a new one.

But multiple consumer surveys aren't boding well for the premium handbag market going into retail's most important time of year.

A shopper looks at handbags at Macy's in New York City.
Scott Mlyn | CNBC
A shopper looks at handbags at Macy's in New York City.

Baird, Morgan Stanley, Piper Jaffray and Cowen and Company have all recently released results from surveying consumers about their handbag preferences, and only Baird's survey showed a slight increase in purchase intent from the spring, though it is down sharply from this time last year.

Cowen and Company analyst Oliver Chen said shoppers are more interested in spending on other categories.

"Handbags continue to move out of favor on both lack of newness and difficult multiyear comparisons," Chen said. "Instead, we believe consumers are focused on consumer electronics, experiences, saving money, or health-care expenditures with selective interest in apparel."

However, when women are ready to buy, there are brands that are resonating more than others.

Coach

Coach may be an iconic American premium handbag maker, but as it works through a multiyear transformation, it appears consumer sentiment surrounding the brand is still in flux.

The handbag maker's fiscal first-quarter earnings release showed a slight drop in total revenue, with sales at North American stores open at least a year falling 9.5 percent year over year. That was, however, about what analysts were expecting and in some cases slightly better.

"We enter the key holiday period confident that we will see continued improvement in our North America comparable store sales, driven by a strong assortment of gifts and new fashion handbags across all channels," CEO Victor Luis said.

In the Cowen handbag survey, consumers surveyed said the new Coach styles are gaining traction with shoppers. "The brand's revamped modern luxury positioning appears to be creating additional interest in Coach," Chen said.

However, Morgan Stanley's AlphaWise handbag survey of 1,000 women showed a slight decline for likeliness to buy a Coach handbag in next six months from the prior six-month period, though Coach remains among the top two preferred brands, second to Michael Kors.

Among the 9,400 female teen consumers Piper Jaffray surveyed, intent to buy a Coach handbag saw a slight tick up from the spring survey. However, when asked which handbag brand is most preferred, Coach dropped for both the upper-income females and the average-income females from six months prior.

Michael Kors

In the first couple of years after its initial public offering, it seemed as if Michael Kors sales would soar for perpetuity. However, over the past year to 18 months, Kors began to look more like a brand bubble and investors started reversing course. The stock has shed 49 percent over the past year.

Kors now has to work a little harder to maintain its cool factor as it walks a fine line between expanding its product offerings to grow market share, without losing its premium status.

In the Baird survey, consumers showed improved sentiment for Michael Kors handbags, though Baird estimated Kors ceded some market share.

The brand was deemed "on the way up" in Morgan Stanley's AlphaWise survey, with consumers showing increased "likeliness to buy in next six months."

However, the results of Piper Jaffray's survey raised some concern. While Michael Kors is still the most preferred handbag brand among females in both the upper- and average-income sets, the spread between the two groups' preferences has never been wider in the survey's history. As a result, Piper Jaffray said "this brand is in unhealthy territory."

Kate Spade

Kate Spade is by far the smallest of the premium handbag players by revenue, but it's gaining fans.

Morgan Stanley's AlphaWise survey ranked Kate Spade second only to Michael Kors for "brands on the way up," according to female consumers. The survey also showed an increase in market share for Kate Spade, though it sat below Kors, Coach and Louis Vuitton.

Among upper-income women in Piper Jaffray's "Taking Stock with Teens" survey, the brand gained ground and took second. Among average-income teens, the brand ranked second.

Baird's survey did show mixed sentiment and purchase intent, but its market share is steady.

With handbag category growth expected to moderate, Chen remains "cautious" for both Michael Kors and Coach. But Baird's Mark Altschwager said he sees "limited downside in handbag stocks at current levels," with the names likely to "trade up on any 'less bad' news."

"Shares could stay range bound until greater evidence of sales and margin inflection emerges," he said.