Coach, Inc. (NYSE:COH)’s earnings call (sign-in required) on Jan. 23 sent its stock price into a tailspin, plunging 16%. Was the correction warranted? Should investors worry about Coach losing its edge? Coach operates in a highly competitive business where consumer fashion tastes can change like the wind. However, some opportunities for Coach exist in China, with the mobile revolution and through catering to both genders. Here are five takeaways from Coach’s last earnings call:

1. North American weakness – Coach’s North American sales actually increased 1%; however, its same store sales declined 2%. Coach cited temporary factors such as Hurricane Sandy and consumer nervousness surrounding the fiscal cliff stalemate as catalysts for weakness. Other factors, increasing competitiveness and markdowns, served as the primary reason for the correction on Jan. 23. In the fickle world of fashion consumers gravitate towards the “in” thing.

2. Brutal competition –

Source: SEC documents.

Coach actually stands well competitively (see table above); however, Michael Kors, due to its focus on “lifestyle” wins out in every category with growth in quarterly revenue and gross profit exceeding Coach by a factor of more than eight when compared to similar periods. Kors plowed through Europe with 97% growth in sales. In North America, sales grew 76%. Coach, in a reactionary measure, wants to transform itself into a “lifestyles” company before its fashion begins to fade.

According to its latest earnings call (sign-in required), Kors utilized a number of channels to drive growth. Kors sells its merchandise in Airports and printed catalogs. Leather goods sales grew in the triple digits especially the handbags.

Despite hindrances from hurricane Sandy, Kors still expects revenue growth of 43-50% in fiscal year 2013.

Fossil performed ok in its most recent quarter (sign-in required). Most of Fossil’s revenue growth came from the Asia-Pacific wholesale scene and direct sales segment with 25% and 19% growth respectively giving Coach some competition for that market. However, Fossil missed out on some opportunities to benefit from “colored leather” trends.  Fossil, in reaction to the “lifestyles” trend, is transitioning to a brand driven focus versus a channel or category focus.

3. Robust growth in China – Coach’s revenue from China grew 40% in the most recent quarter. The growing Chinese middle class turns to the Coach name for accessorizing and looking good. This gives Coach a head start against up and comer Michael Kors who lacks a significant presence there.