Coach Inc (NYSE:COH) released its latest earnings report before opening bell this morning, posting earnings of 59 cents per share, excluding items, on $1.14 billion in sales. Analysts had been expecting earnings per share of 53 cents, excluding items, on $1.09 billion in revenue. GAAP earnings for the fourth quarter were 27 cents. Coach said its non-GAAP earnings include “transformation and other related actions.”

Coach logo

Today’s rally comes after the company’s stock plunged on Monday after competitor Michael Kors Holdings Ltd (NYSE:KORS) posted results that were worse than expected.

Breaking down Coach’s earnings

Coach’s latest earnings report was its fourth fiscal quarter, so this morning’s report also includes results from the full fiscal year. In the quarter that ended June 28, the luxury accessories maker saw a decline of 7% in sales year over year. On a constant currency basis, sales fell 6%. Coach reported an operating margin of 20.4% and a gross margin of 69.4%.

For the full fiscal year, earnings were $3.10 per share, excluding items. Net sales fell 5% from $5.08 billion last year to $4.81 billion this year. Reported earnings per share were $2.79 for the full fiscal year. The company’s operating margin declined from 30.3% to 20.4%, while its gross margin fell from 73% to 69.4%.

Coach updates progress

In a statement Coach CEO Victor Luis cited a difficult year in the women’s bag and accessory business in North America. He also said that during the year, they successfully integrated their European retail businesses, passed $500 million sales in China and increased sales in their men’s products to approximately $700 million globally. In addition, He said they “laid the groundwork” for the transformation of the Coach brand and developed their new retail concept “using an iconic materials palette that is distinctively Coach.”

“A crucial milestone was the arrival of Executive Creative Director Stuart Vevers last September, who has already had a significant impact on the creative direction of the brand,” Luis said in a statement. “This was highlighted by our first New York Fashion Week presentation in February and the editorial praise his inaugural collection received globally.”