World Footwear

Companies

Coach maintains guidance

Nov 7, 2016 United States
Coach maintains guidance
The New York-based design house of modern luxury accessories reported first quarter results for the period ended on the 1st of October. Stable sales marked the period
Victor Luis, Chief Executive Officer of Coach stated: “We are pleased with our performance in the quarter, highlighted by continued positive comparable store sales in North America and growth internationally. We remained focused on elevating the perception of the Coach brand ... At the same time, we implemented the strategic actions necessary to reposition the brand and streamline our distribution in the promotional North American department store channel. Despite this deliberate pullback, we achieved growth across key financials, including sales, gross profit and operating income, as well as double-digit earnings growth.”

In the first quarter of the new financial year, net sales totaled 1.04 billion US dollars, an increase of 1% on a reported basis and a decrease of 1% on a constant currency basis. Net income for the quarter on a reported basis totaled 117 million US dollars, which compares to reported net income in the first quarter of FY16 of 96 million US dollars.

Net sales for the COACH brand totaled 950 million US dollars for the first fiscal quarter, an increase of 1% on a reported basis and a decrease of 1% on a constant currency basis. Total North American Coach brand sales decreased 3% on both a reported and constant currency basis to 545 million US dollars versus 561 million US dollars last year. International Coach brand sales rose by 7% and totaled 395 million US dollars on a reported basis and 3% on a constant currency basis. Greater China sales were approximately even with prior year in dollars and increased 5% on a constant currency basis driven by double-digit growth and positive comparable store sales on the Mainland offset by continued weakness in Hong Kong and Macau. In Japan, sales rose 11% in dollars and decreased 7% in constant currency impacted by a decline in Chinese tourist spend, lapping last year’s dramatic increase. Sales for the remaining directly-operated businesses in Asia rose low-single digits in dollars and constant currency, while Europe remained strong, growing at a double-digit pace.

Net sales for the STUART WEITZMAN brand totaled 88 million US dollars for the first fiscal quarter compared to 87 million US dollars reported in the same period of the prior year impacted by wholesale shipment timing within the fiscal year.

Coach continues to expect revenues for fiscal 2017 to increase by low-to-mid single digits, including an expected benefit from foreign currency of approximately 100-150 basis points based on current exchange rates. In addition, the company is maintaining its operating margin forecast of between 18.5-19.0%. This guidance incorporates the negative impact of both Stuart Weitzman and the strategic decision to elevate the Coach brand’s positioning in the North American wholesale channel, including a reduction in promotional events and the closure of about 25% of doors.

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