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NEW YORK CITY-Net income for handbag retailer Coach Inc. totaled $136 million in its fourth fiscal quarter ending June 27, a 9% increase from the previous quarter’s results, but a 21% drop year-over-year from $172 million, according to financial results released Tuesday. CEO Lew Frankfort said in a conference call that Coach’s lower-priced new Poppy brand has been a strong traffic-builder since its June 26 launch and is likely to help power sales through fiscal 2010.

Sales declined in Q4 by 1% year-over-year to $778 million, driven by same-store sales dips that were partly offset by a 3% gain in direct-to-consumer business. The quarterly results compared favorably to the $740-million tally of Q3. Net sales for fiscal 2009 were up 2% over the previous year to $3.23 billion, while net income for the year totaled $622 million, compared to an FY 2008 total of $742 million.

Frankfort said in Tuesday’s conference call that the year’s results demonstrated the “resiliency” of the Coach model “even in the midst of an extraordinary, challenging environment.” A big plus was the company’s penetration into the Chinese market, where it opened 28 stores in fiscal ’09.

New Coach store openings will pepper FY10, but fewer than in the year prior. The company plans 29 new US and Canada locations in the coming year, including 14 in entirely new markets and about a half-dozen factory outlets. That compares with 42 North American openings in FY09.

The newly-introduced Poppy line, which Frankfort said “has proven to have broad consumer appeal,” will not end up in factory outlets, the Coach CEO said. Down the road, there will be Poppy stores in Japan and possibly in the US. “We think Poppy will be a continuing success story throughout the year.”

Although Coach is offering no specific earnings guidance for FY10, EVP/CFO Michael Devine said in Tuesday’s call that gross margins of 70% to 72% are anticipated over the next few quarters. Gross margin for Q4 ’09 was 70.4% versus 75.9% a year ago.

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