Disappointing handbag sales in North America last quarter and more change to top management announced on Tuesday hit investors' confidence in the prospects of leather goods maker Coach Inc (COH.N).

Shares of New York-based Coach, known for its Poppy handbags, fell 7.6 percent to $53.43 in midday trading.

Sales at Coach's stores open at least a year fell 1.7 percent last quarter in North America, where Coach gets 63 percent of sales. It continues to lose shoppers to hot brands like Michael Kors (KORS.N), kate spade, and Tory Burch.

The company told Wall Street on a Tuesday conference call not to expect any improvement in this new fiscal year. It had announced in February that it plans to offer more footwear and clothing by the holiday season to reignite sales.

But even if successful, those efforts come at a time of significant change at the top, which concerns investors. Coach is getting a new CEO and a new creative director and is looking for a chief operating officer.

"We agree there's a lot going on," long-time Chief Executive Lew Frankfort told Reuters, acknowledging investor qualms. But he disputed the notion that all these changes were disruptive. "We have a seasoned group of Coach veterans taking on these roles."

In January, Coach announced that its international business head Victor Luis would succeed Frankfort next year. Its longtime creative director, Reed Krakoff, credited with fueling Coach's explosive growth in recent years, is striking out on his own now that he has bought his namesake brand from Coach.

On Tuesday, Coach said that Mike Tucci, the head of its North America business, and Jerry Stritzke, its operations chief, were stepping down. Analysts had expected this, given that the two had been believed to be candidates to succeed Frankfort.

Still, it's a lot of change all at once.

"The combination of all of the departures could be a cause for concern because it comes at a time when they're trying to right the ship (particularly in North America) and potentially have issues on the creative side," said John Del Vecchio, a portfolio manager with AdvisorShares Ranger Equity Bear ETF, an all-short, actively managed domestic exchange-traded-fund.

LOSS OF MARKET SHARE

Overall revenue rose 5.8 percent to $1.22 billion in the fourth quarter ended June 29, helped by gains in its men's merchandise and in China. That was below the $1.24 billion Wall Street was looking for.

Coach's problems centered on weak sales in its bread-and-butter business - women's handbags in North America. The drop in comparable-store sales there was the second in three quarters.

"They have lost some market share, no question about it, especially among young, fashion-conscious shoppers," Edward Jones analyst Brian Yarbrough told Reuters.

Executives acknowledged as much, saying the North American handbags and accessories market was expected to rise by a low double-digit percentage in 2013.

Coach is planning to close 16 weaker North American stores this year, but said it would expand a few as well.

Despite the weak North American results, there were some positive signs. Gross profit margin rose slightly, suggesting Coach has not had to discount much.

Francine Della Badia, who heads North America merchandising and is succeeding Tucci, said sales of handbags priced at $400 or more had improved. Earlier this year, Coach had been struggling to sell those pricier products, which is a smaller but important part of its business.

Sales to department stores also ticked up and the company said it will continue to renovate some of its shops at key department stores.

Excluding the effect of currency fluctuations, international sales rose 17 percent, helped by a 35 percent jump in China.

Net income for the quarter fell to $221.3 million, or 78 cents per share, from $251.4 million, or 86 cents per share, a year earlier. Excluding some one-time items, Coach earned 89 cents per share, in line with Wall Street forecasts.