Read Krakoff to Leave Coach; Co. Releases 3Q Earnings

In Industry News, What's New by Lauren ParkerLeave a Comment

 New York—In news that has the industry buzzing, Coach’s president and executive creative director Reed Krakoff is departing the company after 16 years.

Credited for revitalizing the once small family operated Coach brand into the publicly held, international powerhouse it is today, Krakoff will remain at Coach in an advisory role until June 2014.

Krakoff will hardly fade from view, however. He launched his upscale eponymous brand in 2010 and continues to explore strategic options for expansions. A sale to another company is not off the table, as Coach currently owns the brand.

Reed-Krakoff-ShopKrakoff’s design and branding skills are enviable—he received a CFDA Award for Best Accessory Designer of the Year in 2012—so the industry is closely watching what he does with the brand. Whoever Coach finds to replace him will have big shoes to fill.

The news comes amid many corporate changes namely the announcement of its rebranding strategy, and the upcoming change of CEO from Lew Frankfurt to Victor Luis. In other news, Sandra Hill (formerly of Paul Smith) will now head up the women’s ready-to-wear department and Maria Turgeon was promoted from vice president of women’s accessories to senior vice president of women’s factory design.

Coach Releases 3Q Earnings

Krakoff is certainly going out while Coach is on a high.

Yesterday, Coach announced sales of $1.19 billion for its third fiscal quarter ended March 30, 2013, compared with $1.11 billion reported in the same period of the prior year, an increase of 7%. On a constant currency basis sales rose 10% for the quarter. Net income for the quarter totaled $239 million, with earnings per diluted share of $0.84. This compared to net income of $225 million and earnings per diluted share of $0.77, in the prior year’s third quarter, increases of 6% and 10%, respectively.

“We’re pleased with the solid results we achieved in the third quarter as well as the progress we’re making towards our transformation to a global lifestyle brand, anchored in accessories,” says Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc. “Our results demonstrate the brand’s strength across channels, categories and geographies, and reflect the traction we’re achieving in Men’s and digital, two key initiatives. Further, the announcement today of an increase in our dividend reflects our commitment to return capital to shareholders balanced with our investment in the business.”

Third fiscal quarter sales results in each of Coach’s primary segments were as follows:

  • Total North American sales increased 7% to $792 million from $738 million last year. North American direct sales rose 8% for the quarter with comparable store sales up 1%. At POS, sales in North American department stores were slightly above prior year while shipments into this channel rose slightly as well.
  • International sales increased 6% to $382 million from $359 million last year. On a constant currency basis sales rose 14% for the quarter. China results continued very strong, with total sales growing 40% and comparable store sales rising at a double-digit rate. Shipments into international wholesale accounts fell slightly, while underlying POS sales trends remained robust. In Japan, sales were even to prior year on a constant-currency basis, while dollar sales declined 14%, reflecting the weaker yen.

During the third quarter of fiscal 2013, in North America, the company opened one retail store, closed five others and opened two Men’s factory stores. This brought the total to 352 retail stores and 191 factory stores as of March 30, 2013. In China, the 100th location on the Mainland was opened during the quarter, bringing the total to 118. In Japan, Coach closed two locations taking the total to 191 at the end of the quarter. In addition, at quarter-end, the company operated seven locations in Singapore, 27 in Taiwan, 10 in Malaysia and 49 in Korea.















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