Coach Inc.'s (COH) fiscal second-quarter earnings rose 11%, with
a boost from holiday sales that improved over 2008's abysmal
holiday season. Results beat Wall Street's expectations.
However, the upscale leather-goods retailer's shares were off by
5.2% at $35.50 in recent premarket trading as wholesale revenue
declined 8% amid reduced shipments to U.S. department stores. The
stock has more than doubled in the past year and more than tripled
from March, when concerns about high-end spending were peaking.
Coach has been cutting handbag prices and introducing new styles
in an effort to improve sales of shoes and accessories as consumers
continue to cut spending on luxury goods. Efforts to boost its
North American operations showed some success in the prior quarter.
Coach also has been working with its suppliers to avoid hurting
margins, as stores remain cautious about building up inventories
despite signs the economy is stabilizing.
Chairman and Chief Executive Lew Frankfort on Wednesday said
Coach was especially pleased with the rebound at its North American
stores from the holidays, with same-store sales up 3%.
For the fiscal quarter ended Dec. 26, the company reported a
profit of $241 million, or 75 cents a share, up from $216.9
million, or 67 cents a share, a year earlier. Revenue increased 11%
to $1.07 billion.
Analysts polled by Thomson Reuters most recently forecast
earnings of 72 cents on revenue of $1.03 billion.
Gross margin edged up to 72.4% from 72.1% amid changes to its
key product collections and higher margins at its North American
outlet business.
Sales rose 14% at its retail stores during the quarter. Growth
in Japan was 7% because of a stronger yen, but fell 2% in constant
currencies.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com