NEW YORK — Coach Inc.’s financial results are as hot as its handbags.
The New York-based leather goods company said Tuesday its net income skyrocketed 72.6 percent to $29.9 million, or 32 cents a diluted share, for the fourth quarter ended June 28, compared with $17.3 million, or 19 cents, in the same period last year. Results were ahead of its own expectations as well as Wall Street’s forecast of 30 cents a share.
With new introductions, category expansions and ongoing successful collections driving old and new customers into the stores, sales increased 35.1 percent to $231.5 million from $171.4 million and same-store sales were up 21.6 percent. Direct-to-consumer sales rose 31 percent to $139.9 million, with its retail store comparable-store sales increasing 37.1 percent and factory store comps up 3.6 percent. Indirect, or wholesale, sales increased 41 percent to $91.6 million, driven by strong gains at Coach Japan.
“While all areas of our business performed well in the quarter, we were particularly delighted with the continued momentum of our U.S. full-price business, which enjoyed increases in both traffic and conversion in our own stores and significant increases in U.S. department stores’ point-of-sale sales,” Lew Frankfort, chairman and chief executive, told Wall Street analysts on a conference call.
Coach shares finished the day down $1.17, or 2.1 percent, at $54.20 but established a new 52-week high of $57 in intraday trading on the New York Stock Exchange Tuesday.
The company also reported that Frankfort; Keith?Monda, president and chief operating officer, and Reed?Krakoff,?president and executive creative director, inked five-year employment agreements. Associated with these deals was a sign-on bonus expense for Krakoff that impacted fourth quarter after-tax results by 3 cents.
The momentum across all business channels has continued into July, allowing the company to boost its guidance. For the first quarter, Coach expects earnings of at least 33 cents, compared with 24 cents last year, on sales that are expected to grow about 19 percent to at least $230 million. It also now estimates 2004 earnings of at least $1.92, as sales are forecast to swell 16 percent to $1.1 billion.
Frankfort, sounding as excited about the financial results as he did its new fall lineup, said Coach will unveil new products for fall-holiday, starting in July with the Soho Signature group as part of its transitional assortment. This will be followed in August by a Soho leather and suede group, an updated Hampton leather group in September and a Soho Duffle group in October. In addition, he said Coach plans to introduce a holiday plaid group and the Gallery Tote and offer a collection of occasion bags and clutches as well as its cold weather assortments.Coach, which started in 1941 and currently operates 156 retail stores and 76 outlets, said due to the strong market share gains it has made over the past several years, it now believes the brand can support between 300 and 350 doors. It said is expects to add 100 U.S. retail stores over the next four to five years, including 20 new stores in fiscal 2004.
Maribeth Holland, an analyst with Goldsmith & Harris, said“There is a solid cachet with a Coach bag that similarly-priced bags don’t carry,” she said, underscoring the brand loyalty of the Coach customer and that her average age is coming down to 35 years.
For the full year, earnings rocketed 70.8 percent to $146.6 million, or $1.58 a share, versus $85.8 million, or 94 cents, last year, including reorganization charges. Excluding the charge, income in 2002 reached $88 million. Sales in 2003 rose 32.5 percent to $953.2 million over $719.4 million.
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)