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The Worst Performing High-End Retail Stocks Today

Coach & Lululemon Cant Catch a Break

Rivals Encroach on Coachs Turf

Shares of Coach are now trading around $40 apiece, or 33% below the stocks 52-week high. Coachs comparable-store sales declined 21% in North America in its latest quarter.

Coach continues to lose market share to rival Michael Kors.

More North American Store Closures for Coach

North America is Coachs weakest market today.Plagued by double-digit sales declines the retailer was forced to close 13 stores in this region last quarter. Yet, the majority of Coachs revenue comes from its North America business.

Kors Continues to Steal Market Share From Coach

Similar to Coach, the majority of Michael Kors sales also come from North America. However, unlike Coach, Kors has achieved 15 consecutive quarters of double digit comp growth.

Transforming into a Lifestyle brandCoach is in the process of rebranding itself as a lifestyle brand. In the near-term this will likely pressure margins as the retailer invests in new product categories such as shoes and apparel. However, down the road, this should help Coach appeal to a broader customer base and better compete with Michael Kors.

The Hidden Opportunity for InvestorsFrom a business standpoint Coach is stuck in a transitional period today. However, increased competition from Kors is distracting investors from the real story: Shares of Coach are a steal at todays price. The stock trades at just 12 times earnings, which is significantly below the industry average of 25. Moreover, Coach is now trading near its 52-week low of $40.11. This creates an opportunity for patient investors to grab a piece of its turnaround story before the rest of the market.

Inside Lululemons Fall From Grace

The athletic apparel retailer has alienated its customer base recently regaining their trust will take time. The stock is now trading 47% its 52-week high, as a result. Shares of Lululemon are down 26% year-to-date

What Caused Lululemons Decline?

Quality control issues damaged the companys reputation for quality products. Bad press from the mouth of Lulus founder Chip Wilson. Management shuffle and the sudden exit of former chief executive Christine Day.

Lululemons Fundamentals Remain Intact

Dont Overlook Lulus Product Pipeline

Its new apparel line aims to get customers to wear its clothes both in and out of the gym. Products in the new &go line can cost more than 40% more than lulus signature luon yoga pants. This could boost margins for Lulu down the road. Lululemons new &go line could reinvigorate its brand appeal.

Unlocking Lululemons PotentialTheres no denying that the selloff in shares of Lululemon was justified. However, recent changes at the company could bode well for long-term investors. Not only does Lulu have new leadership at the top, but it is also expanding into new product categories like beach gear and everyday wearables. This, together with strong earnings growth, makes Lululemon a compelling turnaround story for buy and hold investors today.

The Motley Fools Top Stock Pick of 2014