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With Coach shares hovering around an all-time high, it seems investors have put any worries about China on the back burner for now.
Although Coach’s business in China is still small at 5 percent of sales, investors view it as the company's biggest growth opportunity. Considering recent data points from LVMH and Burberry, investors will be listening very carefully for any hints of a slowdown on China's mainland when Coach reports earnings on Tuesday.
Last week, both LVMH and Burberry signaled growth in China moderated from previous quarters. While the two power luxury brands are still experiencing healthy sales in the region and there is no cause to sound the alarm bells, the growth trajectory did not go unnoticed.
LVMH saw sales in the leather and fashion category moderate to single-digit growth on the Mainland versus previous double-digit growth. In Burberry’s case, 20 percent growth is nothing to complain about, but that did slow from its previous pace of 30 percent.
Retailers, including Coach, have a lot riding on China. The company has accelerated store growth plans this year. And why not? Same-store sales have been increasing at a double-digit pace and brand recognition is on the rise.
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