Coach Hits Earnings, Misses Revenue, Cites Brand Transformation & North American Sales (COH)

American luxury goods company Coach COH managed to achieve analysts' earnings estimates Tuesday morning for its fourth fiscal quarter, despite missing on analysts' revenue estimates.

The company cited brand transformation and disappointing North American handbag sales as key catalysts for its earning results.

Q4 EPS came in at $0.89 as expected, while revenue for the quarter came in at $1.22 billion versus the consensus estimate of $1.24 billion. While the company did miss on revenue estimates, Tuesday's reported net sales of $1.22 billion for its fourth fiscal quarter compares favorably with the $1.16 billion reported in the same period of the prior year, representing an increase of six percent.

In the company's press release Tuesday morning, Lew Frankfort, Chairman and Chief Executive Officer of Coach, said, “During the fourth quarter we approached double-digit growth in constant currency and continued to gain overall traction on our key strategies supporting our brand transformation. We generated strong international results, leveraged the Men's opportunity globally, strengthened our digital capabilities and drove excellent initial results in the re-launch of footwear. While we maintained our outstanding profitability levels, we were not satisfied with our performance in the Women's handbag and accessories category in North America.”

Related:Another Analyst Cuts Estimates on Coach Ahead of Q4 Results, Cites Several Concerns

For the quarter, on a non-GAAP basis, operating income totaled $371 million, largely even with the year-ago period, while operating margin was 30.3 percent versus 32.1 percent. During the quarter, gross profit rose six percent to $892 million from $838 million reported a year ago, while gross margin was 73.0 percent versus 72.6 percent. SG&A expenses, as a percentage of net sales, totaled 42.6 percent, compared to the 40.5 percent reported in the year-ago quarter, a figure reflecting the acquisition of retail businesses in Asia earlier in the year.

Coach closed on Monday at $57.85.

Posted In: EarningsNewsLew Frankfort
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