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NEW YORK CITY-Despite holding up comparatively well in the holiday downturn, Coach is cutting its North American store expansion by half in the next fiscal year, executives said at the company’s second quarter conference call.

Plans call for opening 20 new stores in fiscal 2010, vs. the usual 40-store expansion in previous years, said Michael Tucci, president of North American retail. Thirteen are planned for new North American markets, including six openings in Canada.

“We have ample real estate opportunities to choose from,” Tucci said. “[But] we will not be stubborn about new store growth. The retail landscape is changing. While there are many new real estate opportunities for us, we’re being very cautious.”

All of Coach’s retail expansions have been halted, as well. But this slowdown may be temporary. “We feel very strongly that we will once again–when the economy recovers–be well situated to achieve strong and profitable growth, and our opportunities continue abundant,” said Lew Frankfort, chairman and chief executive officer. “What we’re doing now, obviously, is adapting to an unprecedented retail environment, balancing both long-term and short-term considerations.”

In the second quarter, net sales were $960 million, down 2% from the same period last year. Excluding foreign exchange rates, net sales dropped 4%. Net income declined 14% to $217 million. North American same-store sales for the quarter declined 13%.

Unlike nearly all of its mall neighbors, Coach did not cut prices at its full-line stores over the holidays, which helped its sales results, despite slower traffic.

“We made the deliberate decision not to discount our stores, protecting our brand equity,” Frankfort said. “We will continue to build market share and grow our store base, although at a slower pace. … We remain confident that the handbag and accessory category will take share from other wardrobing categories such as apparel.”

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