Investors sour on Coach turnround efforts

Investors soured on Coach despite its turnround efforts after the retailer reported fiscal third-quarter results that missed forecasts and as same-store sales fell more than expected.

The New York-based company said same-store sales, a key industry metric that compares sales at stores that have been open for at least a year, declined 23 per cent in North America, worse than Wall Street forecasts for a 21.5 per cent decline.

"A challenged North American women's business reflects continued share loss in the domestic handbag market and we look for stabilisation in this part of the business as the key barometer of recovery to give us confidence that the story has inflected," said Randall Konik, an equity analyst at Jefferies.

Coach reported profits of $88.1m or 32 cents a share compared with $190.7m or 69 cents a share in the year ago period. Sales fell 15 per cent to $929.3m.

Analysts had forecast earnings of 35 cents a share on sales of $950.6m. Adjusted earnings of 36 cents a share were modestly ahead of estimates.

Shares of Coach, which have declined 23 per cent in the past year, fell 8 per cent to $38.78.

Shares of The Container Store, the US retailer of storage items, fell 18 per cent to $17.70, after the company blamed the severe winter weather and the stronger dollar for fourth-quarter results that missed Wall Street forecasts.

The Texas-based company reported earnings of 27 cents a share on sales of $224.3m. Analysts had forecast earnings of 32 cents a share on sales of $233.8m.

Comparable sales declined 0.8 per cent while Wall Street had forecast a gain of 2.9 per cent.

The company said winter storms in February "during the vitally important last four days" of their Elfa shelving system sale and during the last days of the extension of the sale period impacted results.

"Historically, approximately 20 per cent of our Elfa sale sales occur during those last four days and approximately 60 per cent of the sale extension sales occur in the final week," said Kip Tindell, chief executive.

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Merck shares had their best day in over a year after the drugmaker fended off the adverse effect of a strong dollar that has dragged on US corporate earnings.

Shares in the company advanced 4.3 per cent to $59.54 after the company reported better than expected first-quarter results and raised its full-year earnings guidance.

First-quarter earnings per share of 85 cents beat analyst expectations of 74 cents while sales of $9.4bn were about $400m higher than the typical Wall Street estimate.

Merck's outperformance stands in sharp contrast to rival Pfizer, which cut its full-year guidance after it warned that a strengthening dollar was hurting its performance.

Pfizer shares, which have lagged behind Merck's, slipped 0.6 per cent to $34.53.

The greenback's sharp rise also squeezed profits at Whirlpool. The electrical appliance maker was the second worst performer on the S&P, dropping 7.8 per cent to $182.32, after it cut its full-year profit forecast.

The S&P 500 slipped 0.1 per cent to 2,105.81, the Dow Jones Industrial Average declined 0.2 per cent to 18,012.61 and the Nasdaq Composite fell 0.2 per cent to 5,050.41.

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