UBS Remains Bullish on Coach (COH) as Renovated Outlets Show Improvement

UBS reiterated a Buy rating and $42.00 price target on Coach (NYSE: COH) after meeting with management. Outlet renovations are just starting. Renovated outlets have improved sequentially, but unlike full price reno's have not yet turned positive. That said, the pace of outlet product innovation is accelerating.

Analyst Michael Binetti commented, "Full price stores have led COH's NA SSS improvement amid stepped up store reimaging & marketing expense, and more impactful product innovation. But outlets are ~65% of NA sales. Outlet renovations are just starting. Renovated outlets have improved sequentially, but unlike full price reno's have not yet turned positive. That said, the pace of outlet product innovation is accelerating. Recent innovation has injected scarcity in a volume-focused channel. COH is using limited editions (like the recent Snoopy capsule) to communicate more frequently with its database of outlet customers—without focus on discounting. We believe COH has a full pipeline of limited edition outlet innovation (incl. big news in early F'17) that should help reverse years of pricing pressure, which—together w/an improving brand halo—should drive positive outlet SSS by F4Q."

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 $35.82 yesterday.

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