Ahead of the Bell: Coach's new creative chief

Analysts cheer Coach's hiring of new creative director, say it could signal shift in focus

Associated Press

NEW YORK (AP) -- Wall Street analysts on Tuesday cheered the hiring of a new executive creative director at Coach Inc., saying that it could signal a shift toward more traditional luxury goods and highlights the company's focus on international expansion.

Coach late Monday said it hired Stuart Vevers, who had served as creative director for the Spanish brand Loewe since 2008. Before that, he held the same job at Mulberry from 2005 to 2008.

Vevers succeeds Reed Krakoff, who has decided to not to renew his contract with Coach to focus exclusively on his namesake brand, Coach said.

Wedbush analyst Corinna Freedman backed her "Neutral" rating for the stock. She noted that Vevers is relatively unknown in the U.S., so his hiring is unlikely to result in the boost in investor interest that a more recognizable figure might have.

But Freedman said Vevers' hiring, like that of international President Victor Luis as the company's next CEO, highlights the company's shift toward international growth rather than the U.S. market.

She added that Vevers comes from a more traditional luxury goods background, noting that Coach covers a much wider range, with its focus on outlets and heavy discounting keeping it from being considered a traditional luxury brand.

"Repositioning Coach towards a lifestyle brand perhaps with a more traditional luxury sensibility without alienating its core customer will require a delicate balance," Freedman wrote in a note to investors, adding that the majority of the company's profits currently come from its outlets.

William Blair's Amy Noblin backed her "Outperform" rating for the stock, saying she expects investors to view the hiring as a good move. She also pointed to Vevers' luxury experience and "credible record."

Noblin added that Vevers also has experience outside of handbags, but also in related product areas such as apparel and accessories, where Coach is expanding its presence.

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