SOURCE: Paragon Financial Limited
NEW YORK, NY--(Marketwire - Aug 2, 2012) - Luxury retailers, who for the most part have been unaffected by the economic slowdown, took a hit Tuesday. Coach, the largest luxury handbag maker in the U.S. reported fiscal fourth-quarter revenue that fell short of analysts' estimates as a result of shrinking sales growth in North America. The Paragon Report examines investing opportunities in the Luxury Retail Sector and provides equity research on Coach, Inc. (NYSE: COH) and Tiffany & Co. (NYSE: TIF).
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On Tuesday the Commerce Department released a report showing that despite an increase in income consumer spending in the U.S. stagnated in June. According to the report consumer spending was flat in June after dropping 0.1 percent the month prior. Income and wages in the U.S. rose 0.5 percent, while the savings rate hit its highest point in a year, surging to 4.4 percent in June.
"There's been some back-tracking in the labor market so consumers are choosing to save the income rather than spend it," said BNP Paribas' Julia Coronado, chief economist for North America. "The third quarter will be pretty subdued."
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"During the fourth quarter our international sales remained robust, driven by both distribution and productivity increases. In North America, however, an increasingly promotional environment led to lower growth than expected in factory stores." Coach's CEO Lew Frankfort said in a statement. Coach reported sales of $1.16 billion for its fourth fiscal quarter ended June 30, 2012, compared with $1.03 billion reported in the same period of the prior year, an increase of 12%.
Tiffany and Company, is a jeweler and specialty retailer, whose merchandise offerings include an extensive selection of jewelry (91% of net sales in fiscal 2011), as well as timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories. Shares of the company are down over 17 percent year-to-date.
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