After it announced less-than-stellar earnings this morning, investors started bagging Motley Fool Stock Advisor pick Coach (NYSE:COH). Unfortunately, their concerns seem all too understandable.

Coach's fourth-quarter net income fell 32% to $146 million, or $0.46 per share. Revenue dropped roughly 1% to $778 million.

Interestingly, Coach said it did not discount products in retail stores this fiscal year, yet gross margin still fell to 70.4% of sales, from 75.9% this time last year. The company said that maintaining full prices boosted "robust sales" in its factory channel. Does that imply that nobody wants to pay full price for Coach at a retail store? (Color me shocked.)

To further its growth ambitions, Coach said it's acquiring its retail stores in China, in what the company called a long-term investment. Coach can certainly justify such expenditures, even with profits down and sales stagnant, by pointing to its strong cash flow and negligible debt. And in fairness to the retailer, tough times can often present the best opportunities for a company to invest in its future -- however nerve-wracking such spending may be for skittish investors.

The same day Coach reported its numbers, we saw new evidence that consumer confidence continues to ebb (much like last month's disappointing data). Amid this new frugality, luxury retailers like Coach, Nordstrom (NYSE:JWN), and Saks (NYSE:SKS) aren't faring well. And if shoppers keep their wallets shut, certain high-end retailers such as Williams-Sonoma (NYSE:WSM) may not stand a chance. At least in the short term, we might be facing the death of luxury.

Nonetheless, Coach is a good candidate for survival. It's a venerated brand known for high-quality products, and it does have bags of cash. Its strong sales also demonstrate that Coach hasn't suffered the sort of declines currently taking a bite out of downmarket Crocs (NASDAQ:CROX). None of which means today's tidings won't leave investors pondering a jump to safer retail havens. Champion of cheap Wal-Mart Stores (NYSE:WMT) must be looking awfully tempting.

I still believe Coach could be a solid stock for long-term investors -- assuming consumers keep viewing Coach's goods as luxuries deserving of their hard-earned dollars.

Is Coach done for, or just taking a breather? Chime in with your thoughts in the comment box below.

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