For the three months ended Dec. 29, the New York-based firm posted income of $44.2 million, or 99 cents a share, beating consensus estimates, and its own increased projections, of 96 cents. Year-ago profits were $39.2 million, or 88 cents. Sales of $235.8 million were 11.8 percent over last year’s $211 million.
“Our sales this holiday season reflected the cumulative impact of several years of efforts to rejuvenate the brand through fashion, innovation, an updated retail environment sharpening our assortment and by the strengthening of our merchandising presentation and advertising,” said Lew Frankfort, chairman and chief executive, on a conference call. “Our holiday results speak also to consumers’ growing acceptance of Coach as a fashion and gift resource.”
Direct-to-consumer sales rose 10.1 percent to $160.5 million and 0.6 percent on a comparable-store basis, with retail store sales down 0.5 percent and factory revenues up 2 percent. Indirect sales rose 15.3 percent to $75.3 million, driven by strong gains in the international division as a result continued double-digit comp gains in Japan.
Citing a rugby-striped Duffle Sac and Coach’s Signature collection, Carol Pope Murray at Salomon Smith Barney said, “It all starts with product and they just did wonderfully at taking successful ideas and updating them.” She said Coach was a top sector pick and bumped up her third-quarter expectations by a couple of cents to 22 cents.
The company now expects earnings per share of $1.73 for fiscal 2002 compared to $1.50 a year ago and sales of at least $685 million, an increase of 14 percent from last year.
Coach, which currently operates 132 retail stores and 72 factory units, said it plans to add at least seven more retail stores in the U.S. this spring, bringing the total to 20 new stores in 2002. It will also add jewelry to 35 more stores, for a total of 60, by Mother’s Day.
For the six months profits rose 21.2 percent to $56.7 million, or $1.26 a diluted share, from $46.8 million, or $1.18, on a 12.8 percent sales gain to to $386.5 million from $342.5 million.