Buy Coach (COH)

Listening to the management team at Coach (COH) talk about the company’s business is an odd experience. This “fashion” company spends a lot of time talking about “engineering” its products and building production and distribution “infrastructure.” (Want to hear a sample of Coach-speak? Tune into the company’s presentation at the Morgan Stanley Global Consumer and Retail Conference here http://phx.corporate-ir.net/phoenix.zhtml?c=122587&p=irol-eventDetails&EventId=2532032 )

And that’s a major reason that I want to buy Coach shares in the current tough environment for luxury goods. Anybody can roll out a new product at a lower price point designed to appeal to value-conscious luxury-goods buyers (now there’s a phrase I never thought I’d write), but it takes a company like Coach to introduce the new $300 Poppy handbag lines and “engineer” gross margins higher at a lower selling price. For why you want some cost-cutting growth companies in your portfolio now see my post http://jubakpicks.com/2009/11/20/nervous-afraid-to-stay-in-but-scared-to-get-out-join-the-club-and-read-my-three-strategies-for-coping/ )

Update Coach (COH)

Coach (COH) reported that its earnings for the June quarter matched Wall Street expectations at 43 cents a share.

That’s about the last good news for the fourth fiscal quarter that Coach had to announce, however.  Coach certainly hasn’t escaped the collapse in retail sales–although it is weathering the downturn better than most.

For investors who can get past the bad news of this quarter, though, the stock remains a compelling way to profit from the increasing number of middle-class consumers in China. That’s why I put the stock in my book, The Jubak Picks, and why it stays in that portfolio.