Leading marketer of luxury leather goods, Coach Inc, on Tuesday lifted its full-year outlook after reporting a better-than-expected 70 per cent year-on-year leap in first quarter net profit amid surging sales and improved margins.

The New York-based company posted a profit of $22.5 million, or 24 cents per share, for the quarter ended September 28, compared to $12.5m or 14 cents per share, in 2001. Sales shot up 28 per cent to $192.8m from $150.7m.

Coach said in a statement it now sees second quarter sales of about $290m and earnings per share of about 61 cents, It added it expects full-year sales of at least $865m and earnings per share of at least $1.27.

During the first quarter, Coach's gross profit rose 36 per cent to $131.2m from $96.6m last year while its gross margin rose to 68.1 per cent mainly due to the complete ownership of its distribution in Japan through its joint venture, Coach Japan Inc, along with sourcing cost initiatives and product and channel mix.

The firm said direct to consumer sales, which consist primarily of sales at US Coach stores, rose 24 per cent to $106.6m with same-store sales for the quarter up 13.2 per cent, with retail stores up 20.9 per cent and factory stores up 7.5 per cent.

It added indirect sales jumped 34 per cent to $86.2m thanks to strong gains in the US wholesale and international divisions, especially in Japan.

Coach chairman and CEO, Lew Frankfort, said, "Our first quarter results were driven by both the vibrancy of the Coach brand and the strong consumer response to our product offerings across all major business units.

"We're confident that the power of our brand, coupled with the growth strategies we have put in place, will allow Coach to continue to deliver superior financial results during these challenging retail times."

He added: "Our first quarter results were fuelled by remarkably successful transitional and fall introductions. In addition to handbags and accessories, which continue to drive our results, we have also received an excellent response to our women's footwear expansion, both in US department stores and in our retail stores.

"All of these factors, in combination with momentum which has continued into October throughout our major businesses, reinforce our confidence that we will have a strong holiday season."

"In the second quarter, as planned, we will add at least six more retail stores in the US, bringing the total to 13 new retail stores before holiday.

"We will also be adding at least 10 new locations in Japan over the fiscal year which may include the opening of a second flagship store."