Coach Earnings Rise, but Sales Forecast Eases

By Imani Moise 

Coach Inc. said earnings and revenue rose in the most recent quarter as the retailer pulled back from its struggling North American wholesale business.

The luxury handbag retailer also gave a more cautious outlook, though, citing a stronger U.S. dollar in recent months. Coach now expects revenue growth in the low single digits, when it had previously projected low-to-mid single digit growth.

Coach has worked to elevate its brand to combat the promotional activity plaguing the handbag industry. In addition to pulling out of hundreds of department stores throughout the year, last month the company recruited pop singer and actress Selena Gomez to be the new face of the brand to appeal to younger shoppers.

North American Coach brand sales increased 2% to $744 million during quarter, led by a 5% increase in direct sales and 4% growth in same-store sales.

Internationally, sales of the brand rose 3% to $448 million led by 6% and 9% growth in China and Japan, respectively.

In all for the second fiscal quarter, which included crucial holiday sales, Coach reported a profit of $199.7 million, or 71 cents a share, up from $170.1 million, or 61 cents, a year earlier. On an adjusted basis earnings rose to 75 cents a share from 68 cents a year ago.

Revenue rose 3.8% to $1.32 billion.

Analysts polled by Thomson Reuters had forecast earnings of 74 cents on $1.32 billion in revenue.

Shares of coach rose 2.2% premarket to $36.78.

Write to Imani Moise at [e-mail]

(END) Dow Jones Newswires

January 31, 2017 08:06 ET (13:06 GMT)

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