If you follow retail, it's probably not lost on you that investors have been a bit jaded about retail stocks. It's not hard to imagine why; news agencies and analysts have been predicting a slowdown in shopping for various reasons, not least of which is high gas prices. (One Fool recently advised that we all should ignore the retail doomsayers, though.) Regardless of whether you think there's good reason for negativity, one big name -- Coach
Unless you've been residing under a rock, you've likely heard the prognostications that excessively high gas prices would make shoppers snap shut their pocketbooks. This sort of reasoning even seemed to have discounters such as Wal-Mart
Regardless, Coach raised its first-quarter guidance by a penny to $0.25 per share, with sales of at least $445 million. Coach also increased its full-year forecast by $0.01 per share to $1.25 per share. (At the same time, Coach extended the terms for several of its executives to 2011.) The company said that its fall line is already selling well, which bodes well for the coming months. As recently as the beginning of this month, Coach reported solid earnings and also raised guidance at that time.
Investors have been a bit skittish about Coach shares, which you can see from its latest quarter. Some of the reasons that get bandied about include worries about the company's emphasis on outlet sales on the lower-priced end of the spectrum -- which the company contends appeal to a different Coach shopper than the affluent one who is more than willing to pay full price for the Coach brand. This is all part and parcel of Coach's "accessible luxury" initiative, which so far seems to be working out just fine in attracting a variety of customers.
At any rate, Coach's upward guidance yesterday implied that despite whether or not consumers are feeling pinched by high gas prices, that doesn't necessarily mean that they're not willing to splurge on this luxury brand. Although its forward P/E of 27 might not sound like a bargain, it's worthwhile to note that it sounds like things are still speeding along quite well at Coach.
Here's some related Foolish content:
- Should you ignore the retail doomsayers?
- Another leather expert doesn't have quite the same clout as Coach.
- Last quarter, Coach still seemed to have things in the bag.
Alyce Lomax does not own shares of any of the companies mentioned.