Coach (NYSE:TPR) will report fiscal year 2015 second-quarter results before the market opens on January 27th. The luxury retailer has struggled lately with slowing sales and declining profit margins, while competitors such as Michael Kors (NYSE:CPRI) continue to gain favor with consumers. As a result, investors are hoping for a strong Q2 showing from Coach as proof that the company's turnaround efforts are working.

Shares of Coach are down nearly 4% so far this year. However, the stock could climb from here if the retailer can prove its new strategy is resonating with customers. 

Wall Street's outlook
Analysts expect Coach to post a profit of $0.66 per share in the second quarter, down from earnings-per-share of $1.06 a year ago. The Street's outlook for quarterly revenue in the period isn't much better. Analysts are looking for second quarter revenue of $1.23 billion, down more than 15% from $1.42 billion in the year-ago period.

Coach has topped Wall Street's expectations in three of the past four quarters. However, this may be more challenging for the retailer in the current quarter, as Coach continues to struggle with declining sales and profit margins.

As part of its turnaround plan, Coach is closing around 70 underperforming retail locations, and refreshing its product mix in hopes of becoming more of a "lifestyle" brand like rival Michael Kors. Additionally, Coach plans to remodel as many as 150 of its mall retail stores and 140 department store displays in the year ahead. This strategy is already working for the retailer. In fact, Coach locations that had full or partial remodels performed better than those that had not during the first-quarter.

On top of this, Coach recently said it would acquire luxury footwear brand Stuart Weitzman for a reported $574 million. The acquisition will give Coach a meaningful foothold in the luxury footwear market. However, the deal isn't expected to close until the second half of 2015, and therefore won't affect Coach's second quarter earnings.

Despite these developments, regaining investor confidence won't be easy. Even if the luxury retailer beats Wall Street's downcast expectations in the quarter, there is no guarantee that investors will reward Coach by pushing its stock higher. After all, Coach delivered earnings for its fiscal first-quarter that were nearly 18% better than expected. Yet, the stock still fell more than 6% on the news.

Source: Coach. 

Ultimately, investors need to understand that Coach's turnaround story will take time and that the stock could be pressured in the near-term. Nonetheless, for long-term investors the outlook appears bright. Coach has an opportunity to grow its operations in international markets going forward. The company is currently expanding its presence in Europe and is now on track to generate $100 million in revenue in this region in fiscal year 2015.

Not to mention, the stock is attractively priced at its current levels. With its share price now around $36 a pop, Coach is trading at just 14 times earnings or well below the industry median's price-to-earnings of 19. While Coach could surprise Wall Street with strong earnings when it reports on Tuesday, it might not make a material difference in the stock price over the near-term. Instead, this is a stock for patient investors with at least a three-year time horizon, as we could see Coach's turnaround really take hold in the years ahead.

[Editor's note: Updated article to reflect the newly announced earnings release date of January 27th.]