Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of luxury handbag maker Coach
So what: Strong sales overseas helped boost Coach's first-quarter profit 24%, but sluggish U.S. demand is triggering serious concerns over high-end spending. While sales in Japan and China spiked 16% and 60%, respectively, management had to lure cost-conscious North Americans away from cheaper rivals with increased promotional activity, raising worries about profitability going forward.
Now what: I'd look into today's big plunge as a possible buy-in opportunity. "Our goals remain unchanged," Chairman and CEO Lew Frankfort reassured investors. "We're committed to achieving double-digit top- and bottom-line growth over our planning horizon. We have a business model that generates significant cash flow and we're in a position to invest in our brand while continuing to return capital to shareholders." When you couple Coach's still-solid fundamentals with its cheapish forward P/E of 12, buying into that long-term bullishness might not be a bad idea.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Coach. Try any of our Foolish newsletter services free for 30 days.