Coach Inc. profits jumped in the fourth quarter, but its shares fell in morning trading after the company provided fiscal 2018 guidance below Wall Street’s estimates.
The company’s net profits nearly doubled in the period to $151.7 million, or 53 cents a diluted share, from $81.5 million, or 29 cents, a year earlier. Adjusted profits rose to $142 million from $126 million. Net sales for the three months ended July 1 slipped to $1.13 billion from $1.15 billion.
Wall Street was expecting diluted EPS of 49 cents on sales of $1.15 billion.
Shares of Coach fell sharply, dropping 13.2 percent to $41.61.
Victor Luis, chief executive officer, in a statement trumpeted the results, which come as department stores continued to show broad weakness as they adjust to a more digital landscape and changing consumer habits.
“Our strong fourth-quarter results — in which we achieved midsingle-digit North America comparable-store sales for the Coach brand and drove solid growth at Stuart Weitzman — capped an excellent fiscal year 2017 performance for the company,” Luis said.
The next step for Luis is to incorporate Kate Spade & Co., which the company bought in the quarter. Luis also is currently interim ceo of the Kate Spade brand, succeeding Craig Leavitt, who was ceo of the publicly traded company before its acquisition by Coach. Leavitt left the company about three weeks ago, said Luis.
“Kate Spade brings a new, unique brand attitude and an additional consumer segment to the Coach Inc. portfolio and we expect that this acquisition will enhance our position in the attractive and growing $80 billion global premium handbag and accessories, footwear and outerwear market,” Luis said.
For fiscal 2018, the company guided to adjusted EPS between $2.35 to $2.40, on revenues of between $5.8 billion to $5.9 billion. That compares with Wall Street’s consensus estimate for fiscal 2018 of diluted EPS of $2.49 on revenues of $6.04 billion.
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