Shares of Coach Inc. dropped Tuesday, after the luxury handbag and accessories maker reported fiscal third-quarter results above expectations, but said it would not provide financial forecasts for 2009.
Coach's quarterly profit of 46 cents per share topped analysts' average estimate by a penny, and revenue of $744.5 million also came in ahead of expectations. In addition, Coach issued strong fourth-quarter guidance and reiterated its fiscal 2008 outlook.
However, the company said it would no longer break down same-store sales between retail and factory outlet stores, and declined to give guidance for fiscal 2009 at this time.
"While less detailed, this (same-store sales_ measure better aligns operational performance reporting with operational flexibility to respond to changes in market dynamics," Lew Frankfort, chairman and chief executive said in a statement. "Due to the continued uncertainty in the economic backdrop, we believe that it's prudent to wait until our fourth quarter report to offer guidance for the upcoming fiscal year."
But this perceived lack of visibility caused investors to send shares lower. Shares fell 80 cents, or 2.5 percent, to close at $31.70 Tuesday. The stock has traded between $23.22 and $54 during the past 52 weeks.
Morgan Keegan & Co. analyst Brad Stephens said he was "not shocked" by the negative reaction but said investors should not ignore the positive quarterly results.
"While in the near-term investors are going to focus on 'what's wrong,' we believe what's being ignored is how well Coach Inc. is coping with the environment _ posting positive same-store sales, (as well as a sequential acceleration) and double-digit revenue, earnings before interest and taxes and earnings per share growth _ all of which seem to be ignored in the current valuation," he wrote in a note to clients.
He maintained an "Outperform" rating on the stock.
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