Coach Predicts Tough Times Ahead
Luxury handbag maker Coach came in with relatively strong numbers for their fiscal fourth quarter but are still feeling gloomy. Although Coach's fourth quarter profit rose 33% the company has predict that the continued consumer cautiousness in the U.S. will reach well into 2009. As Marketwatch indicates, Coach joins other retailers in predicting reduced spending even among luxury shoppers. The company is planning to go ahead with opening more stores (around 40 North American stores and at least six U.S. factory outlets) but Chief Executive Lew Frankfort said in an interview that the company will introduce products with higher material and labor costs at prices lower than they would have charged during more rosy economic times. This move may spur consumer interest but it will also eat into Coach's bottom line. The company is also planning increased expansion into Japan and China where the demand for Coach is on the rise.
Coach stock has taken a big hit too, the shares have lost more than two-fifths of their value in the past 12 months.