Jan 26, 2016
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Coach Inc's sales rise for first time in 10 quarters

Jan 26, 2016

Handbag maker Coach Inc's quarterly sales rose for the first time in 10 quarters, helped by the acquisition of luxury shoe brand Stuart Weitzman and strong demand in Europe and China.

Shares of the company, which also reported a better-than-expected quarterly profit, rose 4.4 percent to $31.68 in premarket trading on Tuesday.

Coach Inc.

Coach, founded in a Manhattan loft in 1941, said sales from international markets rose 4 percent to $437 million in the second quarter ended Dec. 26, helped by strong demand in Japan, Mainland China and Europe.

"The company deserves credit for its continued growth in China; a result that has bucked the trend of many rival brands which have suffered from the economic slowdown in the country," Conlumino retail analyst Håkon Helgesen said.

Helgesen said the strong performance in international markets perhaps underlined the more premium status of the Coach brand across regions where it is more immature and is not seen as being ubiquitous.

Coach, which bought Stuart Weitzman Holdings LLC for about $574 million last year, said strong demand for boots in the United States helped the brand post sales of $94 million in the holiday quarter.

Stuart Weitzman, whose shoes are endorsed by supermodel Gisele Bundchen, had 60 retail outlets across the world as of Dec. 26.

Coach raised its sales forecast for Stuart Weitzman by $5 million to $340 million for 2016.

The company also said it was raising its full-year operating income forecast based on the second-quarter results, but did not provide details.

Sales at established stores for the Coach brand in North America fell 4 percent, including online sales.

Analysts on average had expected a decline of 4.1 percent, according to research firm Consensus Metrix.

Net sales rose 4.5 percent to $1.273 billion.

Coach's net income fell 7.3 percent to $170.1 million, or 61 cents per share. Excluding items, the company earned 68 cents per share.

Analysts on average had expected a profit of 66 cents per share and revenue of $1.276 billion, according to Thomson Reuters I/B/E/S.


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