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Coach Q1 sales down 10 percent

By Prachi Singh

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REPORT_ Coach has reported sales of 1.04 billion dollars for its first fiscal quarter ended September 27, 2014, compared with 1.15 billion dollars reported in the same period of the prior year, representing a decrease of 10 percent. On aconstant currency basis sales declined 9 percent for the quarter. Net income for the quarter totaled 146 million dollars, with earnings per diluted share of 0.53 dollars. Reported net income totaled 119 million dollars, with earnings per diluted share of 0.43 dollars.

Commenting on the results, Victor Luis, Chief Executive Officer of Coach, said, “Our first quarter results were in line with our expectations and our annual guidance, as continued international growth was offset by our North American handbag business where we have strategically reduced promotional events.”

For the quarter, on a non-GAAP basis, operating income totaled 217 million dollars, compared to 322 million dollars reported in the year-ago period, while operating margin was 20.9 percent versus 27.9 percent reported for the prior year. During the quarter, on a non-GAAP basis, gross profit was 719 million dollars from 827 million dollars a year ago, and gross margin was 69.3 percent versus 71.8 percent for the prior year.

Total North American sales decreased 19 percent, to 634 million dollars from 778 million dollars last year. North American direct sales declined similarly for the quarter with comparable store sales down 24 percent. International sales rose 4 percent to 381 million dollars from 365 million dollars last year. On a constant currency basis, international sales rose 6 percent.

Sales in China rose 10 percent with positive comparable store sales and slower distribution growth. In Japan, sales declined 7 percent on a constant currency basis, while dollar sales declined 12 percent, reflecting the weaker yen. Sales for the remaining directly operated businesses in Asia grew modestly, while Europe remained very strong, growing at a double digit pace in both total and comparable store sales.

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