American leatherwear house of Coach has confirmed plans to shut 20 percent of its stores and upgrade the rest. Coach on Thursday unveiled related restructuring charges of up to $300 million and said same-store sales were likely to decline in the short term.
Wall Street analysis show skepticism as Coach shares hit a low for the year on Friday. Barclay’s Joan Payson called the moves “a welcome shift” although she cut her price target from $45 to $34. Payson figures store improvements will cost about $570 million, partly offset by closing 70 main-line stores and five outlets. But the investments won’t start to pay off until mid-2016, Payson said in a note.
According to Wells Fargo’s Evren Kopelman, Coach is “trying to create a luxury halo around its brand. But we don’t think the more luxury customer will be as interested in Coach as Coach is in them.” Wells cut its price target to $32-$34, from $40-$42.
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