Goldman Makes Negative Comments on Coach (COH) (KORS)
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Price: $39.90 --0%
Rating Summary:
18 Buy, 20 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
Rating Summary:
18 Buy, 20 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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Goldman Sachs reiterated a Sell rating on Coach (NYSE: COH) late on Wednesday. The note pointed out the declining ration of USA Google searches for "Coach outlet store" vs "Michael Kors outlet store" (NYSE: KORS). The ratio was meant to illustrated vulnerability of Coach's market share position in the face of competitors, and analysts see "extended market share losses on the horizon."
Lindsay Drucker Mann said, "Our bearish view on COH is based on the vulnerability of its market share position in the face of an aggressive encroachment by competitors, most of which lead COH in brand equity metrics. These include the likes of Kate Spade, Marc Jacobs, and Tory Burch; but none more threatening than KORS, which, among this group, has already achieved a critical mass of stores and is expanding most aggressively."
"The disparity in COH's brand strength versus its market share (we estimate 25% of US women's handbags versus KORS 15%) is too out of balance to be sustained, in our view. As KORS continues to open stores, we expect a sharp erosion in COH's share that will weigh on comps and valuation," continued the analyst.
"Consider an analysis of Google searches for "Coach Outlet Store" vs. "Kors Outlet Store", which is a case in point of our concern. Over the last 2 years, the ratio of searches has gone from 7:1 in favor of Coach to near parity. For reference, COH has just under double the number outlet doors as KORS. With consumers looking for stores at a similar rate, we would expect market shares to further converge as the distribution gap narrows."
Goldman has a $44 price target of Coach.
For an analyst ratings summary and ratings history on Coach click here. For more ratings news on Coach click here.
Shares of Coach closed at $53.88 yesterday.
Lindsay Drucker Mann said, "Our bearish view on COH is based on the vulnerability of its market share position in the face of an aggressive encroachment by competitors, most of which lead COH in brand equity metrics. These include the likes of Kate Spade, Marc Jacobs, and Tory Burch; but none more threatening than KORS, which, among this group, has already achieved a critical mass of stores and is expanding most aggressively."
"The disparity in COH's brand strength versus its market share (we estimate 25% of US women's handbags versus KORS 15%) is too out of balance to be sustained, in our view. As KORS continues to open stores, we expect a sharp erosion in COH's share that will weigh on comps and valuation," continued the analyst.
"Consider an analysis of Google searches for "Coach Outlet Store" vs. "Kors Outlet Store", which is a case in point of our concern. Over the last 2 years, the ratio of searches has gone from 7:1 in favor of Coach to near parity. For reference, COH has just under double the number outlet doors as KORS. With consumers looking for stores at a similar rate, we would expect market shares to further converge as the distribution gap narrows."
Goldman has a $44 price target of Coach.
For an analyst ratings summary and ratings history on Coach click here. For more ratings news on Coach click here.
Shares of Coach closed at $53.88 yesterday.
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