In the midst of Coach’s brand re-positioning and merchandising overhaul, the company reported an increase in both net sales and gross profits for its fiscal 2017 first quarter.
Net sales totaled $1.04 billion for the first fiscal quarter, an increase of 1% on a reported basis. In other good news, gross profit totaled $715 million on both a reported and non-GAAP basis, an increase of 3% on a reported basis and non-GAAP basis. Both numbers reflect the success of the company’s re-positioning and mark the first time in three years that the company has seen an increase.
The company accredits the positive gains to elevating the Coach brand’s positioning in the North American wholesale channel. “We are pleased with our performance in the quarter, highlighted by continued positive comparable store sales in North America and growth internationally. We remained focused on elevating the perception of the Coach brand through compelling product, differentiated store environments and emotional marketing. At the same time, we implemented the strategic actions necessary to reposition the brand and streamline our distribution in the promotional North American department store channel.” said Victor Luis, Chief Executive Officer of Coach, Inc.
It specifically cites the upswing to store closures and eschewing sales, discounts and other promotional events. From a merchandising perspective, it has successfully teamed up for major collaborations with Disney and the niche French brand Colette. It has also cut back on the amount of merchandise being produced and sold to department stores by 25%, in order to regain exclusivity, and its acquisition of the Stuart Weitzman brand has also paid off.
Luis added, “Despite this deliberate pullback, we achieved growth across key financials, including sales, gross profit and operating income, as well as double-digit earnings growth.”
The report also showed strong numbers for operating income, increased by 17%, and net income, up 10% versus prior year, and inventory, decreasd by 5% in the year ago period.