2 Analysts Weigh In On Coach's Outlook

Coach's (NYSE: COH) second-quarter same-store sales drop of 17 percent and its $132 million charge for inventory "realignment" and store closings helped keep analysts on the sidelines Wednesday.

Citi's Oliver Chen said he's "most encouraged" by the decline in comparable sales. Analysts had expected the number to drop by a whopping 23 percent. Still, Chen maintained a Neutral rating while raising his target from $36 to $38 in a note Wednesday.

"We don't like a pure fashion call," Chen said, adding that discounts in the sector continue to hurt sales while Coach remains "in an investment cycle."

The company is spending heavily on new product lines and on "re-platforming" its brand with revamped stores.

But Morgan Stanley's Kimberly C. Greenberger called Coach "a fading brand" and sees little success in repositioning efforts for "three to five years."

Greenberger reiterated an Under-weight rating and $29 target in a note Wednesday.

The outlook for the company's same-store sales are among "the most challenged" in the retail sector according to Greenberger, noting the company's forecast for 2015 same-store sales declines of up to 19 percent.

Earlier Wednesday, Coach posted a 66 percent decline in second-quarter earnings to $0.27 cents a share, or $0.59 excluding items. Sales fell seven percent to $114 billion. The Street expected $0.53 per share on sales of $1.09 billion.

Coach traded recently at $35.06, down 2.05 percent.