The stock price of Coach plummeted after reporting its third quarter fiscal 2015 financial performance. The shares of the company were trading $39.22 per share, down by more than 7% at the time of this writing around 12:30 in the afternoon in New York.

Coach Inc Stock Plummets On Disappointing Results

Coach 3Q financial results

Coach reported a net income of $100 million or adjusted earnings of $0.36 per diluted share for the third quarter. Its net income was lower than the $191 million or $0.68 in adjusted earnings per share recorded in the same period a year ago. However, it was slightly higher than the $0.35 per share expected by Wall Street analysts.

In terms of revenue, Coach achieved $929.3 million, down from $1.10 billion in the same period last year. Its third quarter revenues missed the $949.90 million consensus estimate.

During the quarter, Coach said its operating income was $124 million. Its operating margin was 13.3%. Its gross profit was $665 million while its gross margin was 71.6%. Its SG&A expenses as a percentage of net sales were 58.3%.

In North America, Coach recorded a 24% sales decline to $493 million from 648 million last year. Its international sales declined 3% to $428 million from 441 million a year ago. On a constant currency basis, its international sales increased 4% driven by a 10% growth in China. Coach said its performance in Europe remained strong.

Coach brand transformation efforts still on track

Coach CEO Victor Luis said, “We are pleased with our third quarter performance, which was consistent with our plan and annual guidance despite the increased negative impact of foreign exchange on our top-line results.”

According to Luis, the company’s brick and mortar business in North America improved sequentially while reducing further its eOutlet events. He added that Coach’s international business grew moderately on constant currency basis.

Furthermore, Luis said the company’s brand transformation effort is still on track. He said Coach “continued to open and renovate modern luxury concept stores” worldwide. The company successfully introduced Stuart Verver’s product in its outlet channel with positive reception.

Coach recorded charges of $23 million related to its multi-year transformation initiatives during the third quarter. According to the company, the charges were primarily due to accelerated depreciation for renovations, lease termination costs related to store closure, and organizational efficiency costs.

“We’re excited by the strong results we’re continuing to generate in our new and renovated stores globally, most notably in North America. We continued to reduce promotional impressions – a critical component of our brand transformation strategy. Our North America quarterly brand tracking survey showed further improvement among category drivers that Coach is perceived as less promotional while our brand affinities remained strong overall.” said Luis.