Higher margins boost Coach second quarter outlook
The US designer of high-end handbags and leather goods, Coach Inc., has upped its earnings forecast for the first quarter ending September 28 2002 citing higher margins, lower cost sourcing and continued strong sales.
In spite of the weak retail environment, the company expects fiscal first quarter earnings to climb at least 21 cents per diluted share – 7 cents more than last year and 3 cents up on analysts’ expectations. Sales are expected to generate between $185 million and $190 million as opposed to the previous forecast of $180 million, and $150.7 million the year before.
Especially healthy margins were posted in relation to the brand’s non-leather ‘Signature’ product line, identified by a Coach "C" motif patterned on woven materials. However, strong margins are also expected from this autumn’s suede and leather-biased lines – mainly on the strength of the outsourcing of production to low cost centres in Asia and the Caribbean.
For the current quarter to date, comparable store sales in the U.S. and Japan rose by more than 10%. For the year, Coach anticipates sales of at least $835 million and earnings of at least $1.20 per diluted share.
