US handbag battle intensifies as Coach updates

 

The battle of the handbags continues this week when US leather brand Coach reveals its third quarter results tomorrow.

Investors are braced for a weak update as the competition has hotted up with rival American brands Michael Kors, Tory Burch and Kate Spade all taking market share globally.

Coach is embarking on a turnaround strategy under new chief executive Victor Luis and executive creative director Stuart Vevers.

The brand has been suffering from weaker sales this year and in January reported its worst same-store sales in 13 years and earnings were below expectations.

Analysts expect third quarter earnings of around $0.62 a share tomorrow  - below the $0.84 a share for the same period in 2013. British designer Mr Vevers recent collection was received well by the fashion pack. 

But analysts at Morgan Stanley said Michael Kors remains the top searched-for handbag brand in the US currently while the number of searches for Coach continued to drop.

Although Coach is far larger than most of its rivals, with sales of around $5bn a year, it is just one of a group of mid-level luxury brands that sell bags for between £300-£500.

UK-listed Mulberry has issued four profit warnings in two years as competition has toughened and its recent pricing strategy was deemed to have alienated existing shoppers. It is on the hunt for a new chief executive and creative director and earlier this month revealed a plan to sell more products at the £500 level to win back customers.

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