It has been long hoped by Coach (COH +3.42%) investors that slowdowns in domestic sales would stabilize and be offset by strong growth internationally, particularly on the Chinese market. However, earnings today that missed analysts' estimates by a wide margin have called that thesis into question and sent shares tumbling by more 6%.
In this video, however, Motley Fool analyst Mike Olsen calls the larger issue into question: the company's flagging brand strength in the face of changing consumer tastes. While growth in the Chinese market was strong, he wonders if it will be enough to counteract Coach's U.S. decline. More important, in today's retail landscape, it has become very difficult for retailers with brand strength trouble to reinvent themselves and pull off a turnaround, with far more stories of failure than success.
Compound this with a large amount of turnover recently in the company's top ranks, and Mike is steering clear of this stock. He notes that, while there may be a value play to make here after today's sell-off for some investors, there are just too many red flags.
