Coach Earnings Soar 34%

The New York City-based fashion retailer, which operates more than 500 stores in the US and abroad, said net sales for the period ending April 1 were up 20% to $498 million, an $82-million increase compared to the $416 million reported during the same quarter last year. Earnings per diluted share stood at 28 cents, up from 21 cents a year earlier, beating analysts' expectations of 27 cents for the quarter. Company execs said they will accelerate new store openings over the next few quarters, adding 12 new US retail shops in the fourth quarter and expanding by at least 85 locations globally during fiscal 2007 to give Coach more than 600 stores by year's end.

The company, which opened stores in three new US markets and added three retail locations to its Japan operations during the quarter, said direct-to-consumer sales showed a 22% increase for the three-month period, with comparable US store sales rising 21.1%. In Japan, one of the firm's strongest markets, sales rose 23% on a constant-currency basis.

"Our business this April has continued strong," said Frankfort, noting that the results reflect the firm's successful distribution strategy in Japan, where it has accelerated retail openings and expanded its existing stores.

Coach estimates that sales for 2006 will be about $2.1 billion for the full fiscal year, an increase from the prior year of about 23%. Per-share earnings for the year are expected to be $1.25, a 36% increase. For fiscal 2007, Coach projects a 19% sales growth with sales rising to about $2.5 billion and earnings per share increasing about 20% to $1.50.