File this one in the "examples of how complex investing is" category. Coach (NYSE:TPR) hit the market's earnings-per-share expectation for its first quarter, but the stock got crushed in trading. As is usually the case, there's more to this than meets the eye. Coach has been hampered recently by poor North American sales, and this latest quarter was no exception.

That's a shame, because Coach has a lot of the pieces required to be a great business. Unfortunately, the missing piece is the keystone, and without it, the company's whole program is threatening to fall in on itself.

Coach's missing piece
If Coach had to do only one thing right, it would be to increase the sales of the handbags to women in America. That's the bread and butter of this business. So a drop in North American revenue and a substantial fall in comparable-store sales -- sales from stores open for more than 12 months -- is the last thing Coach can afford.

As it has done for the past few quarters, Coach seemed to focus its efforts on growing its men's and international businesses. For what it's worth, the company did have success in those arenas. Men's bag and accessory sales grew by more than 25% globally, while internationally revenues grew in local currency but fell to a weak yen.

Recently, it has seemed as if Coach is just trying to chase Michael Kors (NYSE:CPRI) around the globe. While Kors has a smaller revenue stream, Coach has lagged behind the newer designer in sales growth. Kors has been pushing comparable sales up by more than 20% every quarter for the past few years. Coach has made a rush into international markets to try to beat Kors to the punch, but Kors has turned around and simply hammered home growth in the U.S., eating up market share.

What comes next for Coach
On the company's earnings call, Coach's management team reiterated a line that has come up a lot recently. In short, the stall in growth is because the company is transitioning to a global lifestyle brand. It's offering new product lines, targeting new demographics, and increasing its physical footprint. That transition is still waiting on customers, though. Foot traffic has yet to increase across the business.

By contrast, Michael Kors has seen traffic increase by double-digit percentages recently. That's been coupled with an increase in conversions to help the business grow at the high rate that it's managed. None of that is to say Kors is out of the woods just yet. Its high valuation and falling comparable-sales growth rate are leading it toward a slowdown, but for now, it's beating Coach is almost every way.

For Coach, the company needs to get traffic back up by hook or crook. The brand's global cachet comes from its popularity with American women. If that falls apart, then international and men's sales are going to follow. My earlier hesitancy around Coach has turned into full-blown skepticism. I'm steering clear of this brand until the plan involves more than waiting for an increase in North American traffic to happen, as CEO Lew Frankfort said. Hope may spring eternal, but it's not going to pay the bills.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.