US: Coach Q2 profit leaps 37%, ups FY forecast
Luxury goods company Coach has reported a 37 jump in second-quarter profit and upped its full-year forecast after good seasonal demand for bags and accessories.
Quarterly profit including the impact of stock option expense totalled US$174m compared with $127m last year, as net sales grew 22% to $650m from $532m a year ago.
Coach chairman and chief executive Lew Frankfort commented: "Our excellent second-quarter performance continues to reflect the strength of the Coach franchise, our position as a gift authority and the vibrancy of the US handbag and accessory category.
"This strength was evidenced throughout all channels of our business and across all geographies, as consumers enthusiastically embraced our holiday assortment. Our profitability improvement highlights our ability to achieve further gross margin expansion and to leverage our expenses as our sales base increases."
Frankfort continued: "We were particularly pleased by the performance of our entry-level handbags - such as the Soho Small Flap - and the pinnacle portion of our offering such as the Daphne Satchel. This strength, across multiple price points, speaks to the broad appeal of Coach's assortment."
Second-quarter direct-to-consumer sales, which now include Coach Japan, rose 21% to $504m from $416m last year, while indirect sales were up 26$ to $146m from $116m a year ago.
For the six months ended 31 December 31 2005, net sales grew 26% to $1.1bn from $876m in the first six months of financial 2005.
Coach will open about 15 retail stores in the US this spring and at least six stores in Japan in the second half.
For the financial 2006 year, the company expects to generate sales of about $2.1 bn, an increase of 23% from the prior year. Earnings-per-share including option expense are expected to grow 34% to at least $1.23 from $0.92 last year.
Coach markets upmarket accessories and gifts for women and men, including handbags, women's and men's small leather goods, business cases, weekend and travel accessories, footwear, watches, outerwear, scarves, sunwear and related accessories.
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