Second quarter brings cheer to Coach

A timely acquisition helped Coach Inc.’s post a sales gain in the second quarter — its first quarterly increase in 10 quarters.



The handbag and accessories retailer’s total sales increased 4.0% in the quarter ended December 26, to $1.27 billion, up from $1.22 billion in the year ago period.



“We are very pleased with our second quarter performance, which was consistent with our expectations and reflected the most significant progress to date on our transformation plan despite the difficult retail environment globally, said CEO Victor Luis, who has been working to revive the once high-flying brand. “We drove further sequential improvement in our North America brick-and-mortar business — led, as expected, by our retail stores, while our outlet store channel also strengthened against a backdrop of lower tourist traffic and a highly promotional environment.”



Higher costs cut into Coach's net income, which fell 7.3% to a still better-than-expected $170.1 million, or 61 cents per share. Excluding items, the company earned 68 cents per share.



The sales increase was fueled by Coach’s acquisition of luxury footwear retailer Stuart Weitzman and by strong double-digit increases in Europe and Mainland China. Sales in Japan were also up.



In North America, Coach sales decreased 7% to $731 million, from $785 million. Same-store sales were down 4%.



“Overall, our results continue to give us confidence that the cumulative impact of our actions will result in a return to top line growth this fiscal year and positive North American comps by our fourth quarter,” Luis said.