Coach Q3 sales decline 15 percent

Coach announced sales of 929 million dollars for its third fiscal quarter ended March 28, 2015, compared with 1.10 billion dollars reported in the same period of the prior year, a decrease of 15 percent. The company said, reported sales would have been 3percent higher excluding the impact of currency.

Net income for the period totaled 100 million dollars, with earnings per diluted share of 0.36 dollar, excluding transformation-related charges. Reported net income totaled 88 million dollars, with earnings per diluted share of 0.32 dollars. This compared to net income of 191 million dollars and earnings per diluted share of 0.68 dollars in the prior year’s third quarter.

Commenting on the results, Victor Luis, Chief Executive Officer of Coach, said, “We are pleased with our third quarter performance which was consistent with our plan and annual guidance despite the increased negative impact of foreign exchange on our top-line results. As was the case in our second quarter, we drove sequential improvement in our North America bricks and mortar business while further reducing our e-outlet events. In addition, our international businesses posted moderate growth on a constant currency basis, highlighted by double-digit increases in Europe and China.”

For the third quarter, on a non-GAAP basis, operating income totaled 146 million dollars, compared to 263 million dollars reported in the year-ago period, while operating margin was 15.8 percent versus 23.9 percent reported for the prior year. During the quarter, on a non-GAAP basis, gross profit was 665 million dollars from 781 million dollars a year ago, and gross margin was 71.6 percent versus 71.1 percent in the prior year.

For the nine months ended March 28, 2015, net sales were 3.19 billion dollars, down 13 percent. On a constant currency basis, sales declined 11 percent for the period. Net income totaled 446 million dollars, with earnings per diluted share of 1.61 dollars. Reported net income for the nine-month period totaled 391 million dollars, with earnings per diluted share of 1.41 dollars.

Total North American sales for the quarter decreased 24percent to 493 million dollars from 648 million dollars last year. North American direct sales declined 23 percent for the quarter with comparable store sales down 23 percent including the impact of reduced eOutlet events, which pressured total comparable stores sales by about 11 percentage points. At POS, sales in North American department stores declined about 30 percent versus prior year.

International sales decreased 3 percent to 428 million dollars. On a constant currency basis, international sales grew 4 percent. Sales in China rose 10 percent on a constant currency basis and 8 percent in dollars with positive comparable store sales and slower distribution growth. In Japan, sales declined 11 percent on a constant currency basis. Dollar sales in Japan were 23percent below the prior year, reflecting the weaker yen. Constant currency sales for the remaining directly operated businesses in Asia grew modestly while Europe remained strong, growing at a double digit pace*. *At POS, sales in international wholesale locations were essentially flat with prior year.