Investors in luxury leather goods maker Coach Inc. (NYSE: COH) saw their shares tumble earlier this week when the company announced that profit fell 14% in its second fiscal quarter.

Coach earned 67 cents per share for the quarter compared to earnings of 69 cents per share in the year-ago quarter, and sales fell 1.8% to $960.3 million. Gross margin narrowed to 72.1% from 75.4% last year.

Like many other companies, Coach did not provide guidance for the balance of the fiscal year, signifying its lack of visibility going forward. But the company did try to assure investors by pointing to its nearly debt-free balance sheet and large cash position. Shares fell by as much as 15% during trading on Wednesday, but rallied to halve that loss later in the day.

In order to "protect our brand identity," CEO Lew Frankfort said the company resisted discounting during the holiday season. It paid a steep price to do so, because other retailers' heavy discounts hurt traffic at Coach's stores and in department stores.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

Recently, someone told me that only 1% of all Louis Vuitton handbags in the world are authentic, which is quite surprising considering how many people, young and old, tote the luxury status symbols. I guess what most of them don't realize is that some of these bags are the real McCoy, while it seems a lot more are just reproductions. Several weeks ago, I posted Coach bags: You're just not worthy because Coach Inc. (NYSE: COH) was stepping up their luxury handbag game with a new, more exclusive line of bags priced from $10,000 to $500 and adding hoity-toity boutiques to bring in a more elite clientele.

While both Coach and Louis Vuitton (LVMH) (EPA: MC) already have classic and luxury goods status among many, it seems that both companies are grasping for the top rung of the handbag ladder. LVMH may seem to be ahead of the game, since A-list celebrities such as Uma Thurman, Naomi Campbell, Scarlett Johansson, and even rapper Snoop Dog often travel in style and are photographed with LV bags. In comparison, I can't even think of an instance where I've spotted a celebrity with a Coach bag. After a quick Google search, I did however find a picture of Jessica Alba holding a cute Coach Daphne Straw Top Handle Bag ($168), which surprised me because most women I see with Coach bags tend to be older and middle class. In fact, a budding fashionista once told me that Coach bags were "mom" bags. So then it's understandable that Coach would spring this new Legacy line on us in a not-so-veiled attempt to lose its "mom" status.