Luxury Brand Coach, Inc. (NYSE:COH) released a disappointing earnings report this morning, sending shares tumbling by as much as $4 to $48.80 in early trading. The major problem in the report was a 9% decrease in North American sales, dragging down the company’s overall second quarter fiscal 2014 results. The retailer’s 2Q results also missed Street expectations on both profit and revenue.
Details of Coach’s earnings report
Coach, Inc. (NYSE:COH) delivered a dud today when they reported second quarter revenue of $1.42 billion, a 6% drop over the same quarter last year and below the consensus of $1.5 billion. Second quarter net income was reported at $297 million, resulting in earnings of $1.06 per share. This figure was well under analyst consensus projections of $1.11 per share earnings. The reported numbers also represent a decline over the $353 million in net income and $1.23 EPS reported in 2Q 2013.
New Coach, Inc. (NYSE:COH) CEO Victor Luis released a statement after the earnings report today. “We continued to be disappointed by our performance in North America, which was impacted by substantially lower traffic in our stores and by our decision to limit access to our e-factory flash sales site,” he said. Luis also explained that weakness in North American women’s bag and accessory sales over the holidays was the problem, and said this temporary decline more than offset gains in men’s footwear as well as strong growth in Asia and Europe.
China sales are bright spot
China, however, continued to be a bright spot for the luxury brand retailer. Second quarter China sales figures for Coach, Inc. (NYSE:COH) were even better than the stellar Q1 numbers. Sales in China rose almost 25% and the business division is expected to meet or exceed annual guidance of $530 million. International sales improved by 2% to $425 million for the quarter, up from $418 million this time last year. Overall international sales grew by about 11% when compensating for currency fluctuations.