Business

Coach stock succumbing to competition

Competition is heating up in handbags, and Coach is getting pushed to the sidelines.

Shares of the New York-based leather-goods manufacturer slid 6 percent on a drop in holiday sales and profits. Wall Street is fretting that the brand faces a losing battle against archrivals Michael Kors, Tory Burch and Kate Spade.

“We continued to be disappointed by our performance in North America, which was impacted by substantially lower traffic in our stores,” admitted Victor Luis, who this month replaced Coach’s wildly successful founder, Lew Frankfort, as CEO.

Overall sales tumbled 5.6 percent to $1.42 billion in the quarter ended Dec. 28, fueling a 16 percent earnings drop. Shares slumped $3.17 to $49.38.

Luis, a luxury vet who was tapped to succeed Frankfort a year ago after heading Coach’s international division, has a full plate as he looks to reverse the damage.

In addition to Frankfort’s departure, Coach last year lost longtime Chief Creative Officer Reed Krakoff. As a result, concerns are mounting that the label is losing because of stale designs, which the company addressed by tapping a new creative chief, British-born Stuart Vevers, whose designs will hit stores this fall.

But that’s cold comfort after such a disappointing Christmas.

“Investors … are now forced to believe in the magic of a new designer and collection for fall 2014,” said Brean Capital analyst Eric Beder, adding it’s pursuing a “somewhat untenable luxury model.”

Luis also is looking to buff the brand by remodeling stores. But some analysts complain he’s still opening factory stores, which currently account for about two-thirds of Coach’s US business.