Coach reports 7 percent decline in Q3 sales

REPORT_ Coach announced sales of 1.10 billion dollars for its third fiscal quarter ended March 29, 2014,

compared with 1.19 billion dollars reported in the same period of the prior year, a decrease of 7 percent. On a constant currency basis sales declined 5 percent for the quarter. Net income for the quarter totaled 191 million dollars, with earnings per diluted share of 0.68 dollars. This compared to net income of 239 million dollars and earnings per diluted share of 0.84 dollars, in the prior year’s third quarter.

Commenting on the results, Victor Luis, Chief Executive Officer of New York-based Coach, said, “During the third quarter, total sales declined as weakness in our North American women’s bag and accessories business continued to offset strong growth in men’s, footwear, and robust sales gains in Asian markets and Europe. Our business in North America remained challenging in the period, exacerbated by the weather and shift of the Easter holiday. At the same time, China results remained resilient with total sales growing over 25 percent and comparable store sales rising at a double-digit rate.”

For the third fiscal quarter, operating income totaled 263 million dollars, compared to 348 million dollars reported in the comparable year ago period, while the operating margin was 23.9 percent versus 29.3 percent reported in the prior year. During the quarter, gross profit totaled 781 million dollars compared to 880 million dollars a year ago.

For the nine months ended March 29, 2014, net sales were 3.67 billion dollars as compared to 3.85 billion dollars reported in the first nine months of fiscal 2013. On a constant currency basis sales decreased 2 percent for the period. Net income totaled 706 million dollars as compared to 813 million dollars reported a year ago, while earnings per diluted share were 2.51 dollars versus 2.84 dollars.

Third fiscal quarter sales in North America decreased 18 percent, whereas international sales increased 14 percent. On a constant currency basis sales grew 20 percent for the quarter. As noted, sales in China rose over 25 percent. In Japan, sales increased 10 percent from prior year on a constant-currency basis, while dollar sales declined 2 percent, reflecting the weaker yen.