Coach is looking to increase its square footage

Let's face it, North America may remain weak, but it's the global story that makes  Coach Canada Outlet's stock a buy. Too many investors are focused on the fact that Michael Kors is taking Coach's U.S. market share. But Coach is looking to increase its square footage by 9% globally.The other key story for investors is that Coach is looking to hedge the decline in handbags by becoming a "lifestyle" brand. This includes increasing its offering of accessories and footwear. As a result, Coach still remains a solid investment, and it trades at only 15 times forward earnings, while Michael Kors trades at 24 times. 

"Coach Canada Online  became a discount outlet. They cut their own throat. The outlet business is easy money, [but] discounting yourself is the beginning of the end. I can't find the exception. It's hard to have a dual identity. Outlet doesn't build a brand. We don't milk it."But while that might be true for some retailers, it appears that Coach has been successful with its outlet strategy. Coach's outlet stores now make up 60% of its retail sales in North America, up from about 30% in 2006. The outlets have become more profitable than its full-price stores, bringing in about $600 more in sales per square foot.

The story that Michael Kors is taking market share from Coach is well told. During its first fiscal quarter of 2014, Coach's North America sales were down 1% year over year, thanks to disappointing results from women's bags and accessories.Meanwhile, Kors saw sales growth jump 31% in North America last quarter. Driving Kors' growth was footwear and accessories. However, Coach Bags Canada's international segment remains strong, especially in China. Sales were up 35% last quarter in the region.Additionally, helping to hedge the decline in its North America business should be better margin management.