Analyst downgrades Coach to 'Neutral'

Baird analyst downgrades Coach to 'Neutral'

Associated Press

NEW YORK (AP) -- A Robert W. Baird analyst downgraded her rating on Coach Inc. on Friday, saying the luxury handbag maker's market share could come under pressure in the near term.

Analyst Erika Maschmeyer cited aggressive competition, choppy traffic and a potential slowing in category growth for lowering her rating on Coach to "Neutral."

While the company's "reinvigorated lifestyle strategy" was encouraging, she said the benefits would come gradually. Likewise, she also noted that sales growth from the men's and international divisions would take time to build.

Maschmeyer also noted that recent management changes could pose a risk. Victor Luis became CEO in January, taking over for Lew Frankfort, who held the position for nearly 20 years. Chief Financial Officer Jane Nielsen joined the company in July of 2011 and Michael Tucci, president of retail for North America, has a contract that expires in June.

For long-term investors, however, Maschmeyer said she continues to see Coach as a top brand with "solid" global growth prospect.

Coach shares fell 18 cents to close at $51.20.

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