BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Fashion Inc. >  

Burberry And The Coach Effect

Fashion Inc.

by Lauren Goldstein Crowe
Main
What Was The Hot Trend Summer? Criminal Chic   Betsey Johnson Joins Forces With Private Equity

Recent Blog Posts

Links

Aug 22 2007 12:00am EDT

Burberry and the Coach Effect

Analyst Lisa Rachal at Redburn partners put out a note saying that Burberry shares had been unfairly affected by the recent poor performance of Coach Inc. stock. An article in Bloomberg explains that Coach shares had lost 12 percent of value this year, but are still overpriced compared to competitors, trading at 25 times earnings. The article also quotes a Goldman Sachs survey which said, "over half of Coach customers have no plans to buy a Coach handbag this year, up from 35 percent last year." Coach C.E.O. Lew Frankfort blames weakness in the U.S. handbag market. Rachal argues that the U.S. is too small a portion of Burberry's business to be painted by the same brush and that Burberry's bags sell at a more resilient, higher, price point.

Burberry executives seem to agree. The company has been buying back shares for the last two days.

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com
Like Portfolio on Facebook

Come on, like us—you know you want to.

Follow Portfolio on Twitter

Follow us and if you're an innovative entrepreneur, we'll return the favor.

The Mix

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

Slideshows

500 Startups Hits New York

Dave McClure's brainchild makes its way to New York and introduces East Coast money folks to some intriguing new companies. View Slideshow