World Footwear

Companies

Coach returns to growth

May 3, 2016 United States
Coach returns to growth
The US–based company has announced third quarter net sales increasing by 13% over prior year on a constant currency basis (up by 11% on a reported basis). Coach maintains the guidance for consolidated full year 2016
Victor Luis, Chief Executive Officer stated: “We are very pleased with our third quarter performance, highlighted by a return to growth for the Coach brand, driving overall operating profit growth. Our performance was in line with expectations and reflected the consistent execution of the transformation initiatives put into place nearly two years ago, in spite of volatile tourist spending flows, as well as macroeconomic and promotional headwinds .. Our international businesses posted strong growth on a constant currency basis, highlighted by double-digit increases in Mainland China and Europe, as well as sales gains in Japan and Other Asia.”

Net sales for the third quarter totaled 1.03 billion US dollars compared with 929 million US dollars reported in similar period last year, an increase of 11%. On a constant currency basis, total sales increased by 13%.

Net income for the quarter on a GAAP basis totaled 112 million US dollars with a contribution of 3 million US dollars from Stuart Weitzman. This compares to prior year GAAP net income of 88 million US dollars.

Net sales for the Coach brand totaled 954 million US dollars for the third fiscal quarter, compared with 929 million US dollars reported in the same period of the prior year, an increase of 3%. On a constant currency basis, total sales increased by 4%.

Total North American Coach brand sales increased by 1% on a reported basis for the quarter totaling 499 million US dollars, and increased by 2% on a constant currency basis, reflecting flat comparable store sales and a slightly positive impact of e-commerce. International Coach brand sales rose by 5% reaching 448 million US dollars on a reported basis; on a constant currency basis, international sales rose by 7% with growth across all regions. Total China sales rose by 2% in constant currency and declined by 2% in dollars. In Japan, sales increased by 7% in constant currency, while dollar sales rose by 8%, reflecting the stronger yen. Sales for the remaining directly operated businesses in Asia posted solid growth in constant currency but rose slightly in dollars, while Europe remained very strong, growing at a double-digit pace driven by both comparable store sales and distribution increases.

Net sales for the Stuart Weitzman brand totaled 79 million US dollars for the third fiscal quarter.

The company is maintaining its fiscal 2016 constant currency revenue growth and margin guidance. Coach brand revenues for the year are still expected to increase by low-single digits in constant currency on a 52-week basis. Based on current exchange rates, foreign currency is expected to negatively impact overall fiscal 2016 revenue growth by 225-250 basis points. Coach is forecasting revenue for the Stuart Weitzman brand to be in the area of 340 million US dollars on a reported dollar basis for fiscal 2016.

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