Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=214470
Story Retrieval Date: 3/8/2014 2:37:56 AM CST
Coach's line of women's accessories saw disappointing sales this past holiday season.
Coach earnings hurt by soft U.S. sales
Coach's shares nosedived after the luxury good company reported disappointing sales.
Coach Inc. shares plummeted Wednesday after the luxury-goods maker’s disappointing fiscal second quarter results alarmed investors.
In the quarter ended Dec. 29, the company had net income of $352.8 million, or $1.23 a diluted share, up modestly from $347.5 million, or $1.18 per share, in the year-ago quarter. Sales rose 3.8 percent to $1.50 billion from $1.45 billion.
The latest quarter’s per-share results fell just 6 cents short of the $1.29 analysts surveyed by Yahoo Finance had expected. But Wall Street’s reaction was unforgiving: In New York Stock Exchange trading, Coach shares tumbled $9.93 cents, or 16 percent, to close at $50.75.
“We were clearly disappointed in our North American performance, notably in women’s, where results were below expectations,” Chairman and Chief Executive Officer Lew Frankfort told analysts in a conference call.
Frankfort cited a U.S. economy that’s been dented by the fiscal cliff debate and fallout from Hurricane Sandy, along with continued stiff competition in women’s accessories.
While Americans’ consumption of luxury goods has been a bit cautious in the past few years, Asia has been performing spectacularly, and that trend continued in the latest quarter. Coach said sales in China climbed roughly 40 percent during the last year, a period in which the company opened 30 new stores to bring Coach’s total Chinese presence to 125 shops.
Despite a strong presence in China, Coach isn’t abandoning the North American market. Frankfort unrolled plans to transform Coach into a brand that expanded beyond accessories to be what he called a “lifestyle brand.”
“This next evolution of the brand will encompass a full head-to-toe expression of the Coach woman, including a focused ready-to-wear presentation,” Frankfort said. Frankfort added that male clothing and footwear were being added to the mix.