McHugh has been buying stock in high-end handbag maker Coach (COH) since the company has positioned itself well to profit in a weaker economy. Coach will soon introduce its Poppy line of lower-priced handbags, and its outlet stores are very profitable and starting to drive earnings.

High end product buyers don't care about price.

The languishing luxury-goods market showed some new life Tuesday when leather-goods maker Coach declared its first dividend. The New York City-based company (COH) also announced that sales were stabilizing at its North American stores. The upbeat announcements boosted the stock 15%. Coach will pay 7.5 cents a common share each quarter. Disbursement is set for June 29 to investors on its books June 8. The stock goes ex-dividend June 4. Chief Executive Lew Frankfort said that the dividend, which gives the stock a 1.34% current yield, "reflects our financial strength and our confidence in Coach's business outlook." Noting that the company generates significant cash flow and has virtually no debt, he added that "we are in a position to take advantage of profitable growth opportunities, while continuing to return capital to shareholders." Profits in Coach's third fiscal quarter (ended March 31) fell 29%, to $114.9 million, or 36 cents a share, from the level a year earlier. However, volume declined less than 1%, to $739.9 million. Comparable-store sales have now risen to pre-Christmas levels in North America.

Coach, a onetime highflier, today trades for about 21, or just nine times estimates for the fiscal year ending in June 2010. It had $406 million, or $1.22 a share in net cash -- or cash and equivalents minus total debt -- as of the end of September. Coach is well positioned in the handbag and accessories market, where its brand has long appealed to so-called aspirational shoppers; if the recession deepens, it could draw interest, as well, from the former buyers of four-digit "it" bags.

I love their merchandise.

I would think handbags would eventually get played out, but what do I know?

I look at retail, and I simply don't believe that everyone is going under. You could put together a powerhouse merchant/apparel company here if you are Polo Ralph Lauren (RL) or Coach (COH) or VF Corp. (VFC). You can just go pick as you please!

From a recent Mad Money show: "This stock is just going to mark time. No one wants to invest in high end handbags, but I'm a buyer of Coach. Their CEO will turn this one around."

The maker of high-end hand bags announced that its board of directors authorized the repurchase of up to $1 billion in common stock. The New York-based company plans to complete the buyback by June 26, 2010.

Coach recently completed its previous $1 billion-dollar buyback plan, which was initiated in November of 2007. The company repurchased 31.8 million shares at an average cost of $31.42 per share.

Lew Frankfort, Chairman and CEO of Coach said, "The stock repurchase program is designed both to increase economic value for shareholders and to offset share issuances under our employee compensation plans. Coach's strong financial condition allows us to take advantage of
opportunities to purchase our securities at attractive prices, particularly considering our excellent long-term outlook."

On July 29, 2008, Coach issued excellent fourth-quarter results. Net income jumped 47% to $213.5 million, or 62 cents a share, from $160.6 million, or 42 cents a share, recorded in the same period last year. Favorable tax gains and a weak dollar helped fuel profit gains. Revenue increased 20% to $718.5 million from $652.1 million in the year ago period. Even amid the weak U.S. consumer, revenue in North America was better by 18%.

We like to see that Needham Research has a buy rating on Coach. Analyst Christina Chen said, “The luxury consumer continues to spend on trend right handbags as evidenced by the increase in sales of handbags priced over $400 which accounted for 24.0% of US retail sales in F4Q, up from 17.0% last year.” She has a $37-dollar price target on the stock.

The maker of high-end hand bags announced that its board of directors authorized the repurchase of up to $1 billion in common stock. The New York-based company plans to complete the buyback by June 26, 2010.

Coach recently completed its previous $1 billion-dollar buyback plan, which was initiated in November of 2007. The company repurchased 31.8 million shares at an average cost of $31.42 per share.

Lew Frankfort, Chairman and CEO of Coach said, "The stock repurchase program is designed both to increase economic value for shareholders and to offset share issuances under our employee compensation plans. Coach's strong financial condition allows us to take advantage of
opportunities to purchase our securities at attractive prices, particularly considering our excellent long-term outlook."

On July 29, 2008, Coach issued excellent fourth-quarter results. Net income jumped 47% to $213.5 million, or 62 cents a share, from $160.6 million, or 42 cents a share, recorded in the same period last year. Favorable tax gains and a weak dollar helped fuel profit gains. Revenue increased 20% to $718.5 million from $652.1 million in the year ago period. Even amid the weak U.S. consumer, revenue in North America was better by 18%.

We like to see that Needham Research has a buy rating on Coach. Analyst Christina Chen said, “The luxury consumer continues to spend on trend right handbags as evidenced by the increase in sales of handbags priced over $400 which accounted for 24.0% of US retail sales in F4Q, up from 17.0% last year.” She has a $37-dollar price target on the stock.

dropped huge after purchase

Coach is too last year. Store traffic has increased because of holiday shopping but they are having to discount very heavily to move merchandise. I recently received coupons for 50% off all Coach merchandise, thats how scary consumer spending is these days

Coach has topped out.

good at branding but the downside is that it does not really produce luxury items

too quick a ise over past 6 months. Not as fancy as Italian or French fashions

When it comes to stocks, too much "love" is a bad thing. To those who already own Coach, hang on. To those who want to buy Coach, save your pennies and wait for that big bad bear to knock the stuffing out of this preppie little teddy.