Luxury handbag, footwear and accessories maker Coach Inc is trimming its new store growth plans and will offer more lower price lines after second quarter profit fell 14% on weaker than expected sales.

The New York based firm said it will reduce costs "as appropriate," and that by fiscal 2010 it will cut the number of new stores opening in North America to 20 from 40 and freeze retail store expansion.

Chairman and CEO Lew Frankfort described the holiday season as "the most difficult...our company has experienced," after profit fell to $217m, or $0.67 per share, from $252m, or $0.69 per share a year ago.

Quarterly sales were down 1.8% to $960m from $978m as a heavily promotional atmosphere "impacted both traffic and conversion rates in our retail stores and department store locations and ultimately led to weaker-than-expected sales."

Coach, however, said it managed to resist discounting in its retail stores "to protect our brand integrity."

Operating income in the second quarter fell 14% to $348m, while the operating margin dropped to 36.3% from 41.2% in the prior year.

Deeper factory store promotions and lower full price sales meant gross margin dropped to 72.1% from 75.4% a year ago, while gross profit fell 6% to $692m from $737m.

Direct-to-consumer sales rose 2% to $818m, with robust sales in China offsetting a 1% decline in sales at Coach stores in North America. Same-store sales in North American fell by an even steeper 13.2%.

Indirect sales, however, were down 19% to $143m, which Coach blamed on reduced shipments into US department stores.

As well as halting its retail store rollout Coach, which operates 324 retail stores and 106 factory stores, intends to "cut costs as appropriate."

Mr Frankfort added: "We're also expanding our sharper pricing initiative to increase our selection of product across a variety of price points, offering exceptional value to a consumer who is clearly more reluctant to spend."

The company did not provide guidance for the second half of the fiscal year.