By  on April 27, 2005

NEW YORK — Coach remains at the top of its game.

The handbag and accessories firm brand on Tuesday posted a 53 percent gain in net income to $89.2 million for the third quarter ended April 2 and a 48.5 percent leap in income for the nine-month period, to $291.1 million. But sales growth at full-price stores decelerated for the fourth quarter in a row while growing substantially at off-price units.

In discussing the results, Lew Frankfort, chairman and chief executive officer, said during a conference call to investors and analysts that he expects to significantly increase the number of Coach stores in Japan to at least 140, where he plans to mirror the brand’s U.S. multichannel distribution model.

Coach said it was acquiring Sumitomo’s 50 percent interest in Coach Japan for $225 million, plus undistributed profits and paid-in capital of $75 million. The deal is expected to close at the end of the current fiscal year, as well as be accretive to earnings in fiscal year 2006.

Frankfort said the number of flagships in Japan could reach 15, more than double the current level. But there’s also room for much more. Frankfort told analysts, “We expect that we could eventually have a total of at least 140 Coach locations in Japan across the same multichannel distribution model that we have established in the U.S.” That model covers Coach’s own full-price and off-price stores as well as department store distribution.

Frankfort told Wall Street that as Coach approaches its five-year anniversary as a public company, “it is important to note that we’ve achieved double-digit sales and earnings growth in every period. This consistency speaks to the sustainability of Coach’s business model, our ability to effectively execute our strategies and, most importantly, the strength and endurance of the Coach brand, which rests on three core brand equities — product innovation, relevance and exceptional value.”

Shares of Coach closed Tuesday up 5.5 percent to $27.76. The stock’s 52-week high is $29.98, the low, $17.99. Shares of the company are up over 1,000 percent since hitting the market in fall 2000. The stock has gone through three splits since going public, and is about flat since the beginning of this year.

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