The heavy lifting

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The heavy lifting

Post by haoxinren on Thu Jan 20, 2011 2:34 pm

Coach, Inc. (Coach) is a marketer of fine accessories and gifts for women and men. Coach’s product offerings include handbags, women’s and men’s accessories, footwear, business cases, jewelry, , sun wear, travel bags, fragrance and watches. Coach operates in two business segments: Direct-to-Consumer and Indirect. During the fiscal year ended July 3, 2010, the Company introduced Poppy, which offers a variety of silhouettes. It also introduced additional lifestyle collections. The accessories include women’s and men’s small leather goods, novelty accessories and women’s and men’s belts. The Company’s footwear is distributed through select Coach Retail stores, and over 950 United States department stores. The wearable’s category consists of jackets, sweaters, gloves, hats and scarves, including both cold weather and fashion. During fiscal 2010, Estee Lauder Companies Inc., through its subsidiary, tiffany engagement rings, became Coach’s fragrance licensee.
Shares of Coach (NYSE: COH) traded down 0.97% during mid-day trading on Wednesday, hitting $53.615. Coach has a 52 week low of $32.96 and a 52 week high of $58.55. The stock’s 50-day moving average is $55.69 and its 200-day moving average is $45.74. On average, analysts predict that Coach will post $0.61 EPS next quarter. The company has a market cap of $15.890 billion and a price-to-earnings ratio of 21.46.
High-end retailers led the increase in December sales at stores open at least a year, company data showed Jan. 6. The Bloomberg Retail Sales Luxury Index jumped 8.1 percent from the same month a year earlier, while the Bloomberg Retail Sales Discount Index eked out a 0.9 percent rise. Nationwide, retail sales climbed 0.6 percent last month, capping the biggest annual gain in more than a decade, according to the Commerce Department.
The U.S. lost about 8 million jobs during the worst recession since the 1930s, and Fed Chairman said in Senate testimony on Jan. 7 that employers remain reluctant to hire. Payrolls expanded by 103,000 workers in December, less than the median forecast of economists surveyed by Bloomberg News. A healthier labor tiffany co necklace would put more money in the hands of shoppers across the board, further lifting consumption.
The labor-market recovery will become more widespread as we go through 2011, which should take away some of the imbalance” in purchases, said Maki, who specialized in researching household finances at the Fed from 1995 to 2000. “We definitely expect to see some catch-up in spending by middle and lower-income households. It’s one of the ways the recovery will become more entrenched.”
Investors placed their bets early on, favoring companies that cater to consumers shopping beyond basics such as groceries and fuel. The Consumer Discretionary Select Sector SPDR Fund, which includes Tiffany, Coach, Best Buy Co. and tiffany charm bracelet, outperformed the SPDR Standard & Poor’s 500 ETF Trust from November 2008 through October 2010 by more than 50 percent.
Easy Gains Over
The easy gains may be over: The S&P trust has risen 8.8 percent since November 26, 2010, while the consumer- discretionary ETF produced a 4.4 percent gain.
Doug Liggett, a U.S. equity strategist at Credit Suisse, said he recommends an “underweight” position in these stocks for 2011.
“Three years into the market cycle, it’s very uncommon for consumer tiffany co earrings to be the leadership in the market,” Liggett said.
In the meantime, rising share prices signal rich shoppers will retain an edge in driving spending. The top 20 percent of income earners own about 80 percent of equity wealth and half of housing wealth, Maki estimates.
Sales are up at Tiffany & Co. and Coach Inc., buoyed by demand for $6,000-US diamond pendants and $1,200 leather handbags as a stock market surge pads the wallets of the wealthy. At the other end of the economic spectrum, Wal-Mart Stores Inc., the world's largest discount retailer, reports "everyday Americans" are living coach outlet online to paycheque as they await an improvement in job prospects.
"The heavy lifting is being done by the upper-income households," said Michael Ferule, a former Federal Reserve economist who is now chief U.S. economist at JPMorgan Chase & Co. in New York. "They're the ones benefiting the most from the stock market rally, and they're spending."
U.S. unemployment averaged 9.6 per cent last year, the highest rate since 1983, even as the expansion gathered speed.
Consumer purchases reflect bigger gains among high-income households and "financial pressures on those of more modest means," according to minutes of the Fed's meeting on Dec. 14. Ferule estimates the top 20 per cent of wage earners account for about 40 per cent of spending, while Dean Maki, U.S. economist at Barclays Capital Inc. in New York, puts their contribution at closer to 50 per cent.


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