New York–Coach Inc. reported today that its first quarter profit rose 3% helped by an increase in international sales. And in a separate announcement, the leathergoods company’s board of directors approved a massive $1.5 billion share buyback plan. The repurchases will be made through June 30, 2015.
For the quarter ended Sept. 29, Coach posted net income of $221.4 million, or 77 cents a share, compared with $215 million, or 73 cents a share, in the same quarter a year ago.
Total revenue rose 11% to $1.16 billion from $1.05 billion a year ago. Analysts had expected a smaller profit of 76 cents a share on $1.16 billion in sales.
“We were pleased with our results this quarter, highlighted by double-digit top line growth, with strong comparable stores sales–most notably in North America and China,” said Lew Frankfort, chairman/ceo. “We are well positioned for the holiday season and remain confident in our ability to deliver double-digit growth during our planning horizon given the strength of the Coach brand and our increasing global expansion.”
Total North American sales increased 8%, to $784 million from $729 million last year. North American direct sales rose 11% for the quarter with comparable store sales up 5.5%. At its North American department store accounts, sales were essentially even with prior year while shipments into department stores declined, as inventories were planned lower.
Legacy Introduction a Success
International sales rose 15% to $362 million. Sales in China, which the company has called its largest geographic growth opportunity, climbed nearly 40% with comparable store sales up at a double-digit rate. Shipments into international wholesale accounts rose sharply reflecting strong underlying POS sales trends. Sales were up 1% in Japan, on a constant-currency basis. So far, Coach hasn’t reported any slowdown in luxurygoods sales in Asia as some luxury brand have experienced.
Coach’s gross margin remained unchanged at 72.8%. Analysts had estimated 73%, on average.
The company said its launch of its dual gender Legacy collection was a success and “has been embraced by consumers across all geographies and demographics, providing us with a major platform for the years to come.”
Coach had said that its fiscal 2013 will be an investment year in which it will accelerate acquisition of domestic-retail operations in key Asian markets. Coach bought its domestic retail businesses in Malaysia and South Korea during the first quarter.
During the first quarter in North America, the company opened five factory stores, including three men’s factory stores. This brought the total to 354 retail stores and 174 factory stores.
In China, eight net locations were opened, bringing the total to 104. In Japan, Coach opened one men’s factory store bringing the total locations in Japan to 188. In the rest of Asia, Coach now seven locations in Singapore, 27 in Taiwan, 10 in Malaysia and 48 in Korea.