Shares of Coach Inc. fell 11.8 percent in trading Tuesday after the company warned traffic at its U.S. retail stores was slowing. The warning came as the accessories firm posted a first-quarter profit that beat Wall Street analysts' consensus...
Shares of Coach Inc. fell 11.8 percent in trading Tuesday after the company warned traffic at its U.S. retail stores was slowing. The warning came as the accessories firm posted a first-quarter profit that beat Wall Street analysts' consensus estimates by 1 cent.
Coach on Tuesday posted a 23.2 percent jump in first-quarter income, and a 27.8 percent spike in sales. For the three months ended Sept. 29, income was $154.8 million, or 42 cents a diluted share, compared with year-ago earnings of $125.6 million, or 34 cents. On a continuing operations basis, income rose by 34.3 percent to $154.8 million from $115.2 million. Sales grew to $676.7 million from $529.4 million.
The company said direct-to-consumer sales jumped 26 percent to $508 million from $404 million last year, while same-store sales rose 19.3 percent, with retail stores up 10.8 percent and factory store sales skyrocketing 27.3 percent. Sales in Japan increased 17 percent on a constant-currency basis, while dollar sales rose 15 percent adjusted for a weaker yen. Indirect sales climbed 35 percent to $169 million from $125 million a year ago.
The big news for investors was the warning Coach issued regarding weakened store traffic. That caused a sell-off of the stock, which closed at $36.58 in trading Tuesday on the New York Stock Exchange. More than 33.5 million shares traded, compared with a three-month average volume of 5.2 million. Intraday trading ranged from a high of $38.94 to a low of $36.15.
In a telephone interview, Lew Frankfort, chairman and chief executive officer, said the traffic warning for U.S. retail stores applied only to same-store sales, and that the company wanted to be cautious in light of the tough retail environment and since the current quarter's sales are also up against very high comps of 21 percent last year. With data from just 15 percent of the current quarter in, traffic so far is up 10 percent within the same stores that contributed to last year's comps, according to the ceo.
Sales at Coach factory stores are better than usual, due to the unseasonably warm weather in recent weeks, he said.
"Our business is extremely strong, driving [sales to an expected gain of] 20 percent this quarter and the rest of the fiscal year's topline. The bottom line is expected to grow at the same level," he said.In addition, Frankfort pointed out that the company is seeing a "higher conversion rate, even with lower levels of traffic. There is more buying once they come to our store."
Coach attributes its continued success in part to favorable reception by consumers to the monthly product launches starting in July with Carly, followed by Hamptons and Legacy and its latest, Bleecker.
For holiday, Frankfort said, "Bleecker is the cornerstone of our marketing activities. For the first time we are offering fragrance and body lotion. [We are also offering a] much expanded assortment of jewelry in all of our stores."
Frankfort doesn't see a slowdown in customer acceptance of the $400-plus handbag. If anything, acceptance of that price point and higher ones is only going to grow. Bags over $400 represented 25 percent of sales in the last quarter, which is a doubling of handbag sales in that range in the year-ago period, he said.
"We see an enormous white space between $400 and $1,000. The European luxury price is over $1,000 a bag, and our average is just over $300. We've seen a very strong interest among our consumers wanting a more elevated product with better materials and a finer make at an attractive price point between $400 and $800," the ceo said.
He also noted that consumers at the entry price point are eyeing wristlets and pouches, while the stylish affluent consumer is looking for the elevated product.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast