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Pro Analysis

Coach turnaround failing, Morgan Stanley says

People walk past the illuminated facade of a Coach Inc. store in the Tsim Sha Tsui district of Hong Kong, China.
Brent Lewin | Bloomberg | Getty Images
People walk past the illuminated facade of a Coach Inc. store in the Tsim Sha Tsui district of Hong Kong, China.

Morgan Stanley on Wednesday lowered its rating on Coach to underweight from equal weight, saying the luxury brand will disappoint investors with its future financial results.

"COH achieved a +2% 4Q comp, but we question whether a sustainable turnaround is really occurring," analyst Kimberly Greenberger wrote in a note to clients.

"Our definition of a turnaround is sales growth with stable margins or stable sales with margin improvement, but COH has not delivered this yet."