Coach (COH)

Skeptics of Coach argue that Coach's popularity and the increasing sales growth at its factory stores, which sell cheaper and marked-down versions of its merchandise, could result in the perception that its products are too "pedestrian," turning off customers attracted to its stylish handbags. As an affordable luxury retailer, the idea of exclusivity is essential to the company's brand image. If Coach becomes too ubiquitous, it loses its "special" appeal and thus potential customers will move to another brand.

Still subject to the whim of the economy. Even though many of its customers have more cash than average and thus might not be as affected by a decline in the economy, customers may still cut back discretionary spending in the face of harder times.

Slow in Japan. Approximately 20% of Coach's business comes from its Japanese counterpart. Though the company is growing market share there and expects to continue to do so, it still only holds about 9% of the market as the number two player, way behind Louis Vitton's 28% share. Moreover, the overall market for premium handbags in Japan has hit a mature phase and has held steady around 520 million yen.