Keith shorted Coach in the Hedgeye virtual portfolio into the close. The stock is broken below both his TREND support of $63.54 and immediate-term TRADE support of $58.18.
While the company came in slightly better than expected on the top-line, it missed on gross margins and made up for it with lower SG&A in Q4 – not the formula you want to see for a company looking to maintain double-digit top-line growth. In addition, calling the for a bottom in gross margins after breaching a “very achievable” 72% boundary (they came in at 71.8%) as we head into the 2H does not insight confidence. Sentiment is at peak, management has been selling stock, and inventory growth remains twice the rate of sales growth. We see room for further downside from here.