Is Coach back in vogue?
Coach says increased demand for its merchandise and fewer discounts led the luxury goods maker and retailer to report increased profit in the first quarter despite a steep 9.5% drop in same-store sales.
The company said that for the first quarter ended Sept. 26, earnings were 41 cents a share (analysts expected 40 cents). Net income fell 19% to $96.4 million. Sales dropped 0.8% to $1.03 billion in the quarter, missing analysts’ $1.04 billion projection.
Though Coach’s same-store sales declined 9.5% in North America, the drop is an improvement from the fourth quarter’s 19% decline.
“We are pleased with our first quarter performance, which was consistent with our plan and reflected continued progress on our transformation journey,” said CEO Victor Luis. “We drove further sequential improvement in our North America bricks-and-mortar business -- led, as expected, by our retail stores -- with this momentum continuing into the second quarter. We are excited to see our brand momentum building as we execute on our transformation. We enter the key holiday period confident that we will see continued improvement in our North America comparable store sales, driven by a strong assortment of gifts and new fashion handbags across all channels.”
Luis has been trying to turn around the company, which has been tarnished by deep discounting, under-performing stores and stale design.
The company is maintaining its FY16 outlook outlined in August. Coach brand revenues for fiscal 2016 are expected to increase by low-single digits in constant currency on a 52-week basis.
Coach operates 330 retail stores and about 200 factory stores in the U.S.; some 30 retail stores and eight factory stores in Canada; about 200 department store shop-in-shops, retail stores, and factory stores in Japan; and nearly 220 department store shop-in-shops, retail stores, and factory stores in Hong Kong, Macau, mainland China, Singapore, Taiwan, Malaysia, and Korea. It also sells to wholesale customers and distributors in some 35 countries.