Coach Q1 Profit, Revenue Down, Yet Top Estimates; Shares Fall - Update

(RTTNews) - Handbags and accessories retailer Coach, Inc. (COH) Tuesday reported a sharp decline in the first-quarter profit, hurt by declines in North America sales. Net sales fell 10 percent from last year. However, adjusted earnings, as well as revenues topped analysts' expectations. The shares fell more than 6 percent in the morning trade.

According to the firm, continued international growth was offset by North American handbag business, where it has strategically reduced promotional events.

Total North American sales decreased 19 percent to $634 million. North American direct sales declined, with comparable store sales down 24 percent including impact of reduced eOutlet events, which pressured total comparable stores sales.

International sales rose 4 percent to $381 million. On a constant currency basis, International sales rose 6 percent.

For the quarter, the company's net income fell to $119.1 million or $0.43 per share from $217.9 million or $0.77 per share in the previous year.

Excluding certain items, earnings per share were $0.53 for the recent quarter. On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.45 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter fell 10 percent to $1.04 billion from $1.15 billion last year. Analysts expected sales of $1 billion. On a constant currency basis, sales declined 9 percent for the quarter.

Selling, general and administrative expenses advanced to $535.6 million from $505.0 million in the preceding year.

Operating margin was 20.9 percent, compared to 27.9 percent in the same quarter last year.

Victor Luis, chief executive officer said, "While we recognize that our many initiatives will take time to be evidenced in our financial results, our performance to date has been on plan, and we are confident we have the creative direction, team and resources to execute our brand transformation."

COH is currently trading at $33.96, down 6.05 percent.