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.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)