Luxury retailer tops Q2 estimates
Despite a volatile global retail environment, Coach increased sales and profits for its fiscal second quarter.
The luxury handbag and accessories retailer reported revenue of $1.32 billion for the quarter ended December 31, 2016, up 4% from $1.27 billion last year. The retailer’s net income was $200 million, up from $170 million in 2015.
Total North American Coach brand same-store sales rose approximately 4%, while aggregate North American comparable store sales increased approximately 3%, including the negative impact of e-commerce. As expected, sales at North American department stores declined approximately 30% on both a POS and net sales basis.
The company’s overall brand sales rose 2% in the U.S. market, compared to a 3% drop last quarter. While that growth is comprised of a 4% gain at physical Coach locations, it also included a slight drop in e-commerce revenue, and a huge, but “deliberate” pullback in the North America wholesale channel.
On an international level, sales rose 3% to $448 million, from $437 million last year.
“Despite our deliberate pullback in the North America wholesale channel and currency headwinds, we delivered double-digit earnings growth in the quarter,” said Victor Luis, Coach’s CEO.
“We are both pleased and proud of our performance this holiday season, particularly in light of the challenging and volatile global retail environment,” said Luis. “Our team delivered top-line growth in each of our reportable segments, highlighted by positive comparable store sales in North America and overall gross margin expansion.”
Looking ahead, the company continues to project double-digit growth in both net income and earnings per diluted share for the year.
“Our progress to date, including our solid second quarter results, gives us continued confidence in our direction,” Luis added. “Importantly, we are committed to driving relevance for our brands, while building a nimble and scalable business model to support long-term, sustainable growth for Coach, Inc.”