Shares of Coach Inc. on Tuesday rose 6.7 percent following the company’s announcement that it was buying back up to $1 billion in shares.
Coach shares closed at $28.18 Tuesday in Big Board trading.
The company said Monday afternoon that the board authorized the repurchase of up to $1 billion of its outstanding common stock by June 26, 2010.
The accessories firm just completed a $1 billion repurchase program that was put into place in November 2007. The company acquired 31.8 million shares of outstanding common stock under this program, at an average cost of $31.42 per share, including a total of 5.7 million shares at an average cost of $28.45 since it reported fourth-quarter earnings last month.
Lew Frankfort, chairman and chief executive officer of Coach, said, “The stock repurchase program is designed both to increase economic value for shareholders and to offset share issuances under our employee compensation plans. Coach’s strong financial condition allows us to take advantage of opportunities to purchase our securities at attractive prices, particularly considering our excellent long-term outlook.”
Adrianne Shapira of Goldman Sachs on Tuesday raised her 2009 earnings per share forecast for Coach to $2.30 from $2.25 to reflect the more aggressive rate of share repurchase. She noted the firm “continues to generate in excess of $600 million to $700 million in free cash flow and finished 2008 with $700 million in cash on hand and no debt.”