Handbag specialist Coach Inc has reduced its second quarter earnings guidance after seeing sales drop 2% to US$960m during the period.

The US accessories firm is lowering its earnings expectations for the second fiscal quarter ended 27 December 2008 to approximately $0.67 per share, from previous guidance of $0.77.

The company's earlier estimate was based on sales of around $1.05bn.

North American sales for the quarter have fallen by 13% the company said.

Lew Frankfort, chairman and chief executive officer of Coach, said: "The unprecedented retail climate depressed traffic and conversion throughout our domestic full priced business, notably during the key weeks leading up to Christmas."

But he added: "Despite the heavily promotional environment, we maintained our retail prices, protecting our brand proposition."