The Canadian Press - ONLINE EDITION

Coach shares rise on increasing profit; design chief plans to leave next year

  • Print

NEW YORK, N.Y. - Coach Inc. reported fiscal third-quarter results Tuesday that beat Wall Street expectations as the luxury handbag maker saw sales increase in its flagship North American market, as well as overseas.

The New York company also said it's raising its dividend by 15 cents annually to $1.35 per share.

The financial news came as Coach also announced that Reed Krakoff, its president and executive creative director, will not renew his contract when it expires in June 2014 so he can focus exclusively on his namesake brand. Coach is exploring strategic options for the Reed Krakoff brand, which may involve a sale to a group in which Krakoff would participate.

Krakoff, known for helping to revitalize Coach as a luxury brand and pushing splashy advertising to attract younger customers, has been in that job for more than 16 years. Coach said it is seeking a successor.

The news of Krakoff's plans comes two months after Coach's longtime CEO Lew Frankfort, who with Krakoff transformed what had been a small leather goods business into a global luxury brand, announced he will step aside next year. Victor Luis, who is head of international operations, will succeed Frankfort as CEO in January, the company announced February.

Despite big changes at the top, Frankfort told The Associated Press Tuesday that he expects the transition to be seamless. Frankfort will remain as chairman and CEO until January, then will become executive chairman.

The changes are happening as Coach is reinventing itself once again by fashioning itself as a lifestyle brand anchored in accessories.

Investors sent shares up more than 11 per cent, or $5.72, to $56.31. The stock closed Monday's regular session at $50.59, down nearly 9 per cent since the start of the year.

As part of its efforts to branch out to other products, Coach has been building its men's business, which is expected to double to more than $600 million this year. The company's new footwear assortment, which launched during March in over 170 stores in North America and 60 directly-operated stores internationally, has been well-received by shoppers, Frankfort said.

"Consumers are embracing a broader expression of Coach," Frankfort told The Associated Press.

In North America, revenue at stores open at least a year rose 1 per cent. The metric is a key gauge of a retailer's health, because it measures growth by stripping out the impact of newly opened and closed locations. Total sales for the region rose 7 per cent to $792 million.

International sales rose 6 per cent to $382 million, or 14 per cent when stripping out the impact of foreign currency exchange rates. In China, where the company now has 118 locations, sales rose 40 per cent and sales at stores open at least a year rose at a "double-digit rate," the company said.

In Japan, sales were even from a year ago, when adjusting for currency exchange rates.

The company said it reached an agreement to buy its partner's 50 per cent interest in its business in the United Kingdom and Europe, with the transaction expected to close in July.

For the quarter, Coach Inc. said it earned $238.9 million, or 84 cents per share. That's compared with $225 million, or 77 cents per share, a year ago.

Revenue rose 7 per cent to $1.19 billion.

Analysts expected a profit of 80 cents per share on sales of $1.18 billion, according to Thomson Reuters.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Winnipeg Jets Bogosian-Little-Ladd

View more like this

Photo Store Gallery

  • Marc Gallant / Winnipeg Free Press.  Local/Standup- Morning Fog. Horse prances in field by McPhillips Road, north of Winnipeg. 060605.
  • Someone or thing is taking advantage of the inactivity at Kapyong Barracks,hundreds of Canada Geese-See Joe Bryksa’s goose a day for 30 days challenge- Day 15- May 22, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Should the federal government be able to censor how Ottawa is portrayed in the CMHR?

View Results

Ads by Google