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Coach Earnings Up As Company Repositions Flagship Brand

Even as the company insulates itself from over distribution and aggressive promotions, Coach Inc., which owns the Coach and Stuart Weitzman brands, sees revenue increase during the second quarter of fiscal year 2017, ended Dec. 31, 2016.

Net income for Coach rose to $200 million from $170 million, with earnings per diluted share of $0.71, compared with earnings per diluted share of $0.61 in the same period of fiscal year 2016. Net sales totaled $1.32 billion for the second fiscal quarter, an increase of 4 percent over the prior year on a reported basis.

The company’s sales results were negatively impacted by the repositioning of the Coach brand. Announced in August, the company is reducing the number of wholesale locations for its flagship brand in North America by 25 percent in an effort to reduce markdowns and repair the brand image.

The Coach brand experienced a 2 percent increase in net sales, totaling $1.20 billion during the quarter.

North America represented $744 million versus $731 million last year, or 2 percent growth. Comp store sales increased by 4 percent, while direct sales rose by 5 percent. North American department store sales declined 30 percent as a result of the planned pullback.

International sales for Coach rose by 3 percent to $448 million on a reported basis from $437 million, lead by comp store sales in Mainland China as well as direct and comp store sales in Europe.

Net sales for Stuart Weitzman specifically increased 26 percent to $118 million from $94 million in fiscal 16.

Coach, which is in acquisition mode, was at the center of rumors in Q2 that it was eyeing Kate Spade, and earlier that a merger between Burberry and Coach was in the offing. The company also recently tapped Selena Gomez to design for and be the face of the Coach brand, starting with an ad campaign for Fall ’17.