Coach (NYSE:COH) may be well known as the kind of brand people aspire to own, but today it seemed like investors only aspired to sell the stock after the company reported lackluster second-quarter earnings.

Net income fell 14% to $216.9 million, or $0.67 per share. Net sales fell 2% to $960 million, although if you strip out positive effects from currency translation, revenue fell 4%. Gross margin dropped to 72.1%, from 75.4% this time last year, due to deeper factory store promotions, channel mix, and what the company described as a "sharper" pricing initiative in its full-priced goods.

Chairman and CEO Lew Frankfort described "the most difficult holiday season our company has experienced during my 30-year tenure." Of course, Coach is not alone; retailers were ravaged during the holiday shopping season.

Last summer, I noted that luxury was languishing, and in the fall, my Foolish colleague Kristin Graham and I discussed the death of excessive luxury. It's true that companies like Coach and Tiffany (NYSE:TIF) fall in the crosshairs when it comes to consumers taking aim at cutting their spending and becoming frugal again (and of course, some are quite literally broke these days).

And of course, with department stores like Saks (NYSE:SKS), Macy's (NYSE:M), and Nordstrom (NYSE:JWN) currently suffering, companies like Coach are at a disadvantage.

However, maybe investors shouldn't give up on Coach. Coach has a well-respected brand that has stood the test of time, and as far as I have been able to tell, the company seems to have smart and savvy management. Many other luxury brands may be trends and fads that come and go out of fashion, but Coach is here to stay.

While the near term may be very difficult for Coach as consumers pinch their pennies and demand lower prices, Coach has plenty of cash on its balance sheet ($424.2 million) and very little long term debt ($25.1 million), so it qualifies as one of those better-positioned companies in the current economic climate. Meanwhile, if weaker competitors get weeded out -- and some probably will -- Coach will be in a stronger position in the long run.

Of course, it may be a while before Coach can get growth jump-started again, given consumers' new frugality and anxiety over the economy. But even if there's no big hurry to get Coach shares in the bag, I think it's a quality stock for investors' watch lists.

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.