Baird Prefers Carrying Coach Shares Following Handbag Survey

Here is a rundown of how individual brands performed:

1. Michael Kors Holdings Ltd (NYSE: KORS) saw improved search traffic trends in September, but for the quarter ending September, search traffic decelerated 200 basis points. The analyst was expecting an improvement.

2. Coach Inc (NYSE: COH) experienced a weakening in its September traffic, which marked a reversal from sequential improvements dating back to the second quarter of 2015.

Related Link: Guggenheim Initiates Coverage On 21 Retail Stocks

3. Kate Spade & Co (NYSE: KATE) saw its search traffic trends slowing to 6 percent year-over-year globally and 1 percent in the United States versus a 10 percent global growth and 11 percent growth in the United States in August.

4. Vera Bradley, Inc. (NASDAQ: VRA) saw sequentially flat search trends in September, but quarter-to-date trends are coming in below the analyst's expectations.

Handbag Survey

Altschwager also oversaw a handbag survey in which 500 women in the United States were asked for their brand preference among Coach, Kate Spade, Michael Kors, Vera Bradley and privately-owned Tory Burch.

The analyst's quarterly survey has now been done 11 times. A preliminary analysis has thus far found a flattish purchase intent over the next three to six months. Accordingly, the analyst has now adopted a "more cautious near-term stance" on the group.

Over the longer term the analyst prefers owning shares of Coach due to its: a) completed brand "reset," b) a more "differentiated positioning" relative to its peers, c) an accelerating earnings profile and d) an attractive 3.7 percent dividend yield following the stock's approximate 10 percent pullback since its August 9 earnings report.

At Last Check ...

• Coach was down 0.34 percent at $36.52.
• Kate Spade was down 0.64 percent at $17.92.
• Michael Kors was up 0.72 percent at $47.35.
• Vera Bradley was down 3.01 percent at $14.80.

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