Coach net income rises 41%
American-based marketer of luxury accessories, Coach, Inc. has announced very positive results for its second fiscal quarter ended January 1, 2005.
Net sales were $532 million, 29% higher than the $412 million reported in the same period of the prior year. Net income rose 41% to $134 million, or $0.69 per share, compared with $95 million, or $0.50 per share in 2003. These results beat analysts' recently revised consensus estimate of $0.68 per share.
During the quarter, gross profit rose 32% to $403 million from $305 million a year ago. Gross margin expanded by 160 basis points from 74.2% to 75.8%, primarily due to shifts in product and channel mix.
For the six months ended January 1, 2005, net sales were $876 million, up 31% from the $670 million reported in the first six months of fiscal 2004. Net income rose to $202 million, up 47% from the $138 million reported a year ago.
The company said that across all businesses, handbags and women's accessories continued to drive the business. The Legacy Soft Duffle and Gallery Tote groups were said to be key handbag initiatives during the quarter and were instant successes, as was Quilted Signature, while collections such as Soho Leather and Hamptons Leather continued to perform well.
During the second quarter of fiscal 2005, the company opened six Coach retail stores, bringing the total to 185 retail stores and 81 factory stores at January 1, 2005. In addition, five retail stores and one factory store were relocated and expanded. In Japan, Coach opened four new retail locations including the first Osaka and Sendai flagship stores, and expanded a fifth retail location.
The company now estimates full fiscal year 2005 sales of over $1.66 billion, an increase of at least 26% from prior year, with earnings per share of at least $1.87, and an operating margin of more than 36%, compared with analysts' current consensus estimate of $1.84. This reflects second half sales of at least $790 million, up 21% and earnings per share of at least $0.83, up 30% from the $0.64 reported for the same period in fiscal 2004 and above the analysts' consensus estimate of $0.82.
