• Q2 underlying net profit down 33% to US$200m
  • Sales fall 14% to $1.22bn
  • CEO encouraged by “green shoots”
Sales in North America fell 20% during the quarter

Sales in North America fell 20% during the quarter

Luxury accessories business Coach said its transformation strategy was on track despite a 33% slump in second-quarter net profit.

Sales in North America fell 20% to US$785m in the three months to 27 December, while international sales edged down 1% to $421m, but were up 5% on a constant currency basis.

Sales in China were up 12%, but revenues in Japan were badly impacted by currency issues.

Coach CEO Victor Luis said the figures were in line with the company’s guidance figures at constant exchange rates, but added that the strong dollar has impacted revenues.

He said: “We were pleased with the sequential improvement in our North American comparable store sales – notably in the bricks and mortar channel – and the growth of our international businesses.”

Luis also said that the company’s transformation strategy was beginning to work: “We’re encouraged by the green shoots we are seeing in our business, as our brand transformation begins to take hold across the three brand pillars of product, stores and marketing.”

UBS analyst Michael Binetti noted: "While we still see several challenges to Coach's turnaround, the F2Q update likely means Street estimates have stopped going down in the near term - which should help stabilise the stock."

Meanwhile, Coach announced that Andre Cohen had been promoted to take over as president – North America, replacing Francine Della Badia, who will leave the company in February.

David Duplantis, currently president, global digital and customer experience, will take on an expanded role including global marketing and customer intelligence – responsibilities previously with Stephanie Stahl, who also leaves in February.