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It seems that investors are losing confidence in Coach, Inc. (COH - Analyst Report), after this designer and marketer of fine accessories and gifts disappointed with its second-quarter fiscal 2014 performance. Shares of this Zacks Rank #5 (Strong Sell) have dropped 3% since the earnings announcement on Jan 22, whereas year-to-date the stock has fallen 14.3%.

Estimates for Coach have shown a downtrend since the company posted the results. The softness in results triggered a downtrend in the Zacks Consensus Estimates, as analysts become less constructive on the stock’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that fell 8.6% to $3.17 for fiscal 2014 and 9.2% to $3.46 per share for fiscal 2015 in the past 30 days.

The company came up with dismal sales that declined 6% to $1,419.6 million — after dipping 1% during the first quarter — due to sluggishness in the North American market and also fell short of the Zacks Consensus Estimate of $1,501 million.

Coach sells products that are largely discretionary in nature and thereby depends upon consumers’ disposable income. Consumers in turn are highly sensitive to macroeconomic factors. Given the difficult consumer spending environment in the past couple of quarters, things have become a little difficult for Coach of late.

The bottom line also failed to impress investors, as quarterly earnings of $1.06 per share missed the Zacks Consensus Estimate of $1.11 and tumbled 13.8% from the prior-year quarter.

Fashion obsolescence remains a major concern for Coach’s business model, which involves a sustained focus on product and design innovation. The company’s pioneer position could be affected by delays in product launches. It is noteworthy that the company operates in the highly competitive premium handbag and accessories segment.

Other Stocks That Warrant a Look

Other better-ranked retail stocks that look promising and are expected to continue with their upbeat performance include G-III Apparel Group, Ltd. (GIII - Snapshot Report) and Hanesbrands Inc. (HBI - Analyst Report) both sporting a Zacks Rank #1 (Strong Buy), along with Gildan Activewear Inc. (GIL) holding a Zacks Rank #2 (Buy).

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