Sales grew 12 percent, to $235.8 million from $211 million, for the second quarter ended Dec. 29 and rose 0.6 percent on a comparable-store basis, as retail stores were down 0.5 percent and outlet sales rose 2 percent.
As a result, Coach said it raised its second-quarter earnings estimates to at least 96 cents from the 92 cents it had projected Oct. 23 and still better than the 88 cents recorded last year. Coach had projected quarterly sales of $225 million.
“I’m very pleased with our performance, especially considering the weak retail environment and decline in tourism,” Lew Frankfort, chairman and chief executive officer, said in a statement. “Our robust holiday results reflect the strength of our product and brand, as well as the success of our cost-cutting initiatives, tight inventory management and marketing programs.”
Dave DeMattei, president of Coach’s retail division, told WWD: “Our success was simply having a sharply focused assortment in the right environment, including the strength of our presentation and marketing. The customer clearly responded. For us, this holiday season represented a culmination of all of our efforts we have put into the repositioning of Coach in the marketplace.”
Margaret Mager of Goldman Sachs said she attributes Coach’s strong holiday selling this year to its repositioning as more modern and fresh, without sacrificing its previous reputation for quality, value and American style. The analyst said she raised her estimates for fiscal 2002 earnings per share to $1.70 from $1.65, and to $2 from $1.95 for fiscal 2003.
Sales grew in each of Coach’s distribution channels, with direct-to-consumer, which consists primarily of its retail stores, rising 10 percent, to $160.5 million from $145.7 million, driven by its popular Signature line, new duffel bag and the Hampton’s leather carryall. Indirect sales increased 15 percent, to $75.3 million from $65.3 million, propelled by continued double-digit gains in comps in Japan and the consolidation of the joint venture in Japan.
Results for the second quarter, which ended on Dec. 29, are expected to be reported Jan 23. Coach, which currently operates 132 full-line stores and 72 factory outlets, said it plans to open 20 full-line stores and four factory outlets in total this year.
Coach’s upbeat report followed a similar assessment Tuesday by Tiffany, as reported. Although the bulk of the retail market will report comps today, a handful of others checked in with December results Wednesday. Chico’s FAS and Hot Topic, two specialty retailers focused on very specific, although radically different, consumers, again posted strong results.
Chico’s said its December comps increased 14.2 percent on top of last year’s 34.2 percent gain. By week, comps rose 14 to 15 percent in the first two weeks, 11 percent in week 3, 19 percent in week 4 and 13 percent during the final week of the retail month.
Hot Topic, a specialty retailer that sells music-licensed and music-influenced apparel and accessories for teens, said its December comps rose 6.1 percent, as average dollars, average units per transaction and the average number of transactions per store increased from last year. Betsy McLaughlin, president and ceo, said in a statement that the company plans to open 70 new Hot Topic stores and 15 Torrid stores in the coming fiscal year.
The City of Industry, Calif.-based retailer also reported its board set a 3-for-2 split of its common stock. The stock split is effective Feb. 6 for shareholders of record as of Jan. 23. Following the split, Hot Topic will have about 31.3 million shares outstanding.