NEW YORK — Coach Inc. delivered another quarter of robust sales and earnings growth on Tuesday but wants even more: The handbag and accessories firm said it is aiming to double sales in five years.
The company posted a 36.5 percent jump in fourth-quarter profits while full-year earnings gained 34.3 percent from year-ago results. Sales swelled 30 percent in the three-month period, which was its 22nd consecutive quarter of sales growth of at least 20 percent.
"We're pacing ourselves. We have a blueprint to double our volume to $5 billion over four to five years," Lew Frankfort, chairman and chief executive officer, told WWD. Coach's current sales volume is $2.61 billion.
For the quarter ended June 30, net income rose to $160.6 million, or 42 cents per diluted share, from $117.6 million, or 31 cents, in the same period a year ago as sales climbed to $652.1 million from $501.6 million.
For the year, net income rose to $663.7 million, or $1.76 per diluted share, from $494.3 million, or $1.27, a year ago, while sales grew 28.4 percent to $2.61 billion from $2.04 billion.
For fiscal 2008, Coach expects sales to gain about 21 percent to $3.16 billion, the company said in its quarterly report. "Operating income is expected to rise about 23 percent with an operating margin improvement of at least 50 basis points," the company said in its statement. "Earnings per share are forecast to rise to at least $2.06, up about 22 percent from last year."
The positive outlook did little to raise Coach's share price Tuesday as investors took profits following a run-up of the stock prior to the earnings announcement. Shares of Coach closed down 5 percent to $45.46, which is about where the stock was prior to the gains made during Monday's run-up.
Of note during the quarter were sales in Japan, which gained 19 percent on a constant-currency basis. "In Japan, we were particularly pleased with our outstanding sales and market share growth in both the fourth quarter and for the year, which we achieved despite continued softness in the imported accessories market," Frankfort said in a statement. "Our rapidly expanding sales in Japan reflect the success of our distribution strategy, and demonstrate how well the Coach proposition resonates with the stylish Japanese consumer. This was clearly evidenced by the success of Ergo, reflecting the appeal of these lightweight leather handbags with minimal hardware."If past successes — such as the introduction of its lifestyle collection Ergo here and in Japan, and a limited launch of jewelry and fragrance — are any indication for the future, Coach will indeed be busy in the months ahead. On the company's agenda are:
-?Belted versions of its Ergo bags using hardware in September.
-?An expanded jewelry offering with an all-store distribution also in September.?
- A second lifestyle platform called Bleecker in October, followed by the launch of another lifestyle collection called Heritage Stripe, set to launch in early spring.
But Coach is being cautious about its expansion plans. While it initially forecast it would open two stores for its Legacy collection this year, one in New York and one in Los Angeles, it now will open only one, on Bleecker Street in Manhattan around mid-October. "It's in our backyard, making it easier for us to micromanage, which we like to do in a pilot environment. We'll use that as a laboratory for us. Based on our learnings, we'll decide how to expand beyond that," Frankfort said.
Not that Coach doesn't continue to experiment. The company late last month added Coach Clique as a section to its Web site, which provides updates on new styles, suggestions of the season's must-haves and even a horoscope section to find that perfect bag.
"During the last 12 months, we had 50 million unique visits, with the average consumer spending over six minutes during each visit. She enjoys our site, and our objective is to broaden her experience and give her more opportunities to interact with Coach," the ceo said.
The entire site gets updated monthly to coincide with the cadence of the new floor displays in Coach stores. There are also constant updates on availability of some products, such as when a product is sold out, at which point the item is removed from the site.
"There are some [items] where we offer seasonal colors, which have only one production run. Our goal is sell out before the end of the season," Frankfort said.
While Coach offers a range of opening price points, it has increased the number of bags in the $400-plus category, particularly for many of its limited edition bags. A Thompson Top Handle bag, a capsule group of limited edition styles, retails for $898, while a Lily Legacy Satchel in the extra large size sells for $1,198. Coach's Hamptons Village Large Carryall, featuring an updated look for the widely successful collection, sells for $798.Frankfort said on a conference call with analysts, "We are seeing a continuation of about 20 percent growth in the premium handbag and accessory category in North America and heightened interest in the category globally as it takes hold in emerging markets for luxury goods such as greater China."
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)