Coach to implement restructuring plan
American leatherwear house of Coach has confirmed plans to shut 20 percent of its stores and upgrade the rest. Coach on Thursday unveiled related restructuring charges of up to $300 million and said same-store sales were likely to decline in the short term.
Wall Street analysis show skepticism as Coach shares hit a low for the year on Friday. Barclay’s Joan Payson called the moves “a welcome shift” although she cut her price target from $45 to $34. Payson figures store improvements will cost about $570 million, partly offset by closing 70 main-line stores and five outlets. But the investments won’t start to pay off until mid-2016, Payson said in a note.
According to Wells Fargo’s Evren Kopelman, Coach is “trying to create a luxury halo around its brand. But we don’t think the more luxury customer will be as interested in Coach as Coach is in them.” Wells cut its price target to $32-$34, from $40-$42.