Coach, Inc. (NYSE:COH) posted fiscal third-quarter results today that beat Wall Street expectations, backed by increased sales in the North America and also overseas.
Coach, Inc. (NYSE:COH) earned $238.9 million, or 84 cents per share in the quarter, compared to $225 million, or 77 cents per share in the same quarter one year ago. Revenue for the company increased 7 percent to $1.2 billion. Revenue from stores open at least a year in North America gained 1 percent while total sales from the region increased 7 percent to $792 million. Earnings exceeded analyst estimates of 80 cents per share on sales of $1.18 billion.
The CEO said that the company is making progress to establish itself as “global lifestyle brand,” with a possible foray into men’s business.
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Overseas sales for the company grew by 6 percent to $382 million and by 14 percent if the effects of foreign currency exchange rates are taken out. Sales from China improved 40 percent while sales from stores open at least a year recorded a “double-digit rate.” Coach has 118 stores in China. Sales from Japan, after adjusting for currency effects, were almost flat from one year ago. Coach, Inc. (NYSE:COH) revealed that it has entered into an agreement with its European and Britain partners to purchase their 50 percent stake. The deal is expected to close in July.
The New York-based company announced that president and executive creative director Reed Krakoff will not renew his contract after it expires in June 2014 as he plans to focus on his namesake brand. The company has started the search for the successor as its longtime CEO, Lew Frankfort, also revealed his intentions, two months ago, to leave the company in 2014.
The exit of Frankfurt will be a huge blow to the company as he transformed the small leather goods company into a global luxury brand. Krakoff has been Coach, Inc. (NYSE:COH)’s creative director for the past 16 years, and has been the force behind building the company’s brand and attracting young customers with splashy advertising.
The luxury handbag maker also revealed plans to increase dividends 15 cents annually to $1.35 per share. The company is considering strategic options for the Reed Krakoff brand including a sale to a group.
The handbag maker’s shares gained 9 percent today, compensating for the decline since Jan. 1 in just one day.