“Factory stores are actually much more profitable than full-price stores, because SG&A (sales, general and administrative) expenses are so low,” Champine told CNBC’s “Squawk on the Street.”
So, the luxury retailer’s best bet right now is to sell at a discount to hockey moms at factory outlets?According to Champine, yes.
“Those hockey moms are more important than China is. China is just turning profitable now, so it is not really a material contributor,” said Champine. “Coach has such huge share — 25 percent in dollars — of the U.S. market. They are very much dependent on their mainstream American customers.”
Champine has some confidence in this customer base. She has a $71 price target for Coach, but currently rates the stock a “hold.”
Meanwhile, the U.S. is showing some signs of a summer uptick. Personal income rose in June, and in July, a rise in consumer confidence came unexpectedly.
—By CNBC.com’s Jennifer Leigh Parker
Additional News: US a Drag on Coach’s Fourth-Quarter RevenueAdditional Views: Analyst Sees Growth Potential in Coach
CNBC Data Pages:
Laura Champine does not personally own Coach shares, nor does her firm, Canaccord Genuity.
Follow Jennifer Leigh Parker on Twitter @jparker741.