Shares of Coach Inc. slipped 7.8 percent to $39.03 in early afternoon trading after the handbag maker posted third-quarter results in which both sales and net income saw declines, due in part to foreign exchange impact.
For the three months ended March 28, net income fell 53.8 percent to $88.1 million, or 32 cents a diluted share, from $190.7 million, or 68 cents, a year ago. Excluding brand transformation costs, net income would have been $100 million, or 36 cents a diluted share.
Net revenues decreased 15.5 percent to $929.3 million from $1.10 billion. In North America, sales declined 24 percent to $493 million, while direct sales fell 23 percent and comparable stores decreased 23 percent. Sales in department stores fell 30 percent. All channels reflected the reduction of the company’s eOutlet events, while sales in department stores also reflected a decline in shipments to the channel. International sales slipped 3 percent to $428 million, although it grew 4 percent on a constant currency basis.
Victor Luis, chief executive officer, said the company continues to drive “improvement in our brick-and-mortar business while further reducing our eOutlet events…. Importantly, our brand transformation remains on track across the three key brand pillars,” which include opening and renovating its modern luxury concept, and introducing Stuart Vevers’ line into its outlet stores.
For the fourth quarter, the company will continue to open and renovate stores globally and integrate the Stuart Weitzman brand. Coach said it was formulating plans for celebrating its 75th anniversary this fall.