Coach Profit Rises on Fancy Handbag

Coach Inc.the largest American luxury leather-goods maker, said first-quarter profit increased 34%, led by the introduction of Signature Stripe handbags. The company raised its earnings forecast for the year.

Net income in the quarter through September 30 was $125.6 million, or 34 cents a share, exceeding analysts' estimates. A year earlier, profit was $93.6 million, or 24 cents, the New York-based company said today in a statement. Coach expects full-year earnings of at least $1.63 a share.

Chief Executive Officer Lew Frankfort is unveiling wallets and other gifts under $100 and a line of pet accessories to spur shopping during the holidays, Coach's biggest selling period. Coach also introduced its highest priced collection called Legacy at the end of September.

Separately, Coach spokeswoman Andrea Shaw Resnick said in an e-mail statement that the company has settled a lawsuit against Target Corp.regarding counterfeit versions of some handbags. Target is the second-largest American discount chain.

David Schick, a New York-based analyst at Stifel, Nicolaus & Co., expected profit of 32 cents a share, according to his October 17 report. Schick was a topranked by StarMine Corp. for the accuracy. His projection was 1 cent more than the average forecast of 19 analysts surveyed by Thomson Financial, which doesn't disclose the basis of the projections to Bloomberg News.

Coach's earnings have beaten analysts' estimates in 24 of the past 25 quarters, Mrs. Resnick said.

First-quarter revenue climbed 23% to $553.9 million. The company sees sales for the year of $2.55 billion. In August, Coach projected annual profit of at least $1.55 a share on sales of $2.5 billion.

Shares of Coach gained $2.23, or 6.1%, to $38.56 as of 9:55 a.m. in New York Stock Exchange composite trading. The stock had gained 9% this year through yesterday, lagging behind the 10% advance in the Standard & Poor's 500 Index.

Sales at Coach's American retail stores open more than a year rose 16%, whiles sales at the discount outlets surged 27%.

In Japan, total sales increased 21%, excluding the impact of translating the yen to American dollars. Sales at stores open at least a year in Japan, Coach's second-largest market after America, rose in the "mid-single-digit" on a percentage basis, Coach said. Indirect revenue, which includes sales to American department stores and international locations that are not owned by Coach, jumped 11%.

Coach had 230 retail stores and 87 outlets in North America as of September 30. In Japan, it had a total of 130 sales locations, including 126 owned by Coach.

Signature Stripe, a line of reversible bags featuring Coach's interlocking C designs with a stripe on top, accounted for 15% of the company's American and Japanese retail sales in July, when it became available, Mrs. Resnick has said.

Source: nysun.com