TPR Tapestry Inc

Coach Inc. (COH), the designer and marketer of fine accessories and gifts, is scheduled to report its fourth-quarter 2011 financial results on August 2, 2011. The current Zacks Consensus Estimate for the quarter is 65 cents a share. For the quarter under review, revenue is $1,009 million, according to the Zacks Consensus Estimate.

Third-Quarter 2011, a Synopsis

Coach, the maker of handbags, wallets, shoes and other accessories, posted better-than-expected third-quarter 2011 results on April 26, on the back of healthy sales in North America and China. However, the recent catastrophe in Japan dented the company’s performance to some extent.

The quarterly earnings of 62 cents a share beat the Zacks Consensus Estimate of 60 cents, and came ahead of 50 cents earned in the prior-year quarter buoyed by strong top-line growth.

The New York-based Coach said that total net sales for the quarter came in at $950.7 million, up 14.5% from the year-ago quarter, and outpaced the Zacks Consensus Estimate of $947 million.

Fourth-Quarter 2011 Zacks Consensus

Analysts considered by Zacks, expect Coach to post fourth-quarter 2011 earnings of 65 cents a share. The current Zacks Consensus Estimate reflects a growth of 1.6% from the prior-year quarter earnings. The current Zacks Consensus Estimate for the quarter ranges between 60 cents and 68 cents a share.

Zacks Agreement & Magnitude

Of the 20 analysts following the stock, 2 analysts revised the estimates upwards in the last 30 days, and 2 analysts raised their estimates in the last 7 days. Both the revisions did not have any material impact on the Zacks Consensus Estimate.

Positive Earnings Surprise History

With respect to earnings surprises, Coach has topped the Zacks Consensus Estimate over the last four quarters in the range of 3.1% to 14.6%. The average remained at 8.8%.

This suggests that Coach has beaten the Zacks Consensus Estimate by an average of 8.8% in the trailing four quarters. Given the past performance we expect the company to outperform the Zacks Consensus Estimate.

Coach Recommendation: Neutral

Coach’s sustained focus on store sales productivity, merchandising, marketing and strategic pricing have helped it remain afloat in a difficult consumer environment as well as drive comparable-store sales. Management remains confident of sustaining a double-digit growth momentum in both top and bottom lines, after posting better-than-expected third-quarter 2011 results on the back of healthy sales in North America and China.

The company’s long-term growth drivers include expansion of its global distribution model and venture into under-penetrated markets. Moreover, a healthy balance sheet with a significant cash balance and a negligible debt load, positions it to drive future growth.

We remain concerned about Coach’s operations in Japan, which was recently hit by the earthquake and tsunami. The company highlighted that the recent devastation in Japan hurt third-quarter 2011 results, and will further impact the fourth quarter performance.

Currently, we have a long-term Neutral rating on the stock. However, Coach, which competes with Polo Ralph Lauren Corporation (RL), holds a Zacks #2 Rank that translates into a short-term Buy rating.

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