Coach Purse Marketing survey

In a report published Monday, Bernstein analyst Anne-Charlotte Windal said that the results reported this quarter "make us on the margin more optimistic about underlying domestic category growth" in the handbag segment.

Analyst Anne-Charlotte Windal maintained an Outperform rating on Michael Kors Holdings Ltd KORS 2.18%, with a price target of $66, while reiterating a Market Perform rating on Coach Inc COH 2.31%, with a price target of $44. The June 2015 Handbag Survey indicates that Michael Kors "scores better with consumers than with investors."

Michael Kors reported disappointing negative constant currency comps of 5.8 percent for North America last quarter. "While management mentioned declining tourism spend and a decelerating watch business as two major drivers of this soft North American performance, investors are concerned about a general decline in brand appeal with the domestic consumer, in particular in the handbag category (~50% of North America net sales)," Windal wrote.

Coach had initiated a major brand transformation initiative, with renewed brand appeal in North America, which contributed about 60 percent of total revenue.

The Handbag Survey indicated that among the accessible luxury competitive set, "Coach and Kors still lead in terms of future purchase intent." Kors' brand familiarity remained around 75 percent, versus 85 percent for Coach, suggesting that Kors has "room to increase its reach." Despite this, Coach continues to appear "directionally weaker" than Kors "with the younger consumer group and on "fashion" perception," Windal mentioned.