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(Bloomberg) -- Coach Inc.’s acquisition of handbag rival Kate Spade & Co. is proving to be a difficult task.
The company gave a weaker annual forecast than Wall Street had predicted, hurt in part by efforts to burnish the Kate Spade brand by pulling it out of many department stores. That sent the shares down as much as 7.1 percent in early trading.
The outlook suggests that Coach’s efforts to become a multibrand company will weigh on earnings for the foreseeable future. The company acquired Kate Spade in July, aiming to appeal to more millennials. But Coach also set out to decrease the business’s reliance on so-called flash sales and the troubled department-store industry -- no easy feat.
The retail industry’s broader slowdown also doesn’t give the New York-based company much margin for error.
“In an unpredictable environment, we are evolving to drive our long-term success by reinventing ourselves,” Chief Executive Officer Victor Luis said in a statement.
Coach expects earnings this year of $2.35 to $2.40 a share. Analysts had estimated profit of $2.50. Revenue will grow about 30 percent to as much as $5.9 billion, also shy of predictions.
Shares of the fashion house fell as low as to $44.50 in premarket trading. The stock had gained 37 percent this year through Monday’s close.
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