High-end accessories company Coach Inc. (COH) reported second-quarter earnings that topped analyst expectations on Thursday, sending its stock up 6.6% to a seven-month high of almost $39.
Total sales fell 14 percent to $1.22 billion in the three months ending Dec. 27, 2014–analysts had expected $1.25 billion.
North American sales declined by 20 percent to $785 million as expected, with comparable store sales down 22 percent, six points of which were due to the impact of reduced outlet events. Sales at North American department stores declined at a high-teens rate versus the prior year, while shipments into department stores also fell.
International sales decreased by only 1 percent to $421 million, which corresponded to a 5 percent increase on a constant currency basis. Sales in China rose by 13 percent, and in Europe advanced at a double-digit pace as well.
Reported net income of $183 million, or $0.66 per diluted share, beat analyst estimates, but declined 32 percent from a year earlier due to the stronger dollar and costs associated with store closures and renovations.
In 2013, Coach brought in designer Stuart Vevers, formerly of luxury handbag maker Loewe, in attempt to shore up the company’s product offerings. During the second quarter, Coach said it introduced its first “modern luxury concept stores in key markets globally.”
This past month, the company announced it would purchase Stuart Weitzman, a maker of high-end women’s shoes, from private equity firm Sycamore Partners.
CEO Victor Luis said in the earnings release, “We are on track with the strategic agenda outlined in June and know that our transformation will take time – it is an iterative process that requires significant investment. As we look over our planning horizon, we remain confident in our roadmap to reinvigorate long-term sustainable growth and realize our vision for global modern luxury.”