Coach Q1 Profit Declines On Weak North America Sales; Shares Down - Update

(RTTNews) - Handbags and accessories retailer Coach, Inc. (COH) Tuesday reported a decline in first-quarter profit, as net sales dropped, reflecting a fall in North America sales. Earnings per share were flat with last year, but topped analyst' estimates.

The shares are down more than 7 percent in the morning trade.

In North America, total sales decreased 1 percent to $778 million, and comparable store sales were down 6.8 percent. International sales edged down to $365 million. On a constant currency basis, International sales rose about 9 percent from the prior year.

Lew Frankfort, chairman and chief executive officer of the company said, "During the first quarter we achieved slight overall sales gains in constant currency, benefiting from our geographic diversity. We continued to drive excellent growth in emerging markets and Europe as well as in the Men's business and developing lifestyle categories, such as footwear."

Coach said it moved forward with its transformation initiatives, and focused on addressing the competitive handbag and accessories category in North America.

For the first quarter, the company posted net income of $217.88 million, down from $221.38 million in the previous year. Earnings per share were $0.77, unchanged from last year.

On average, 30 analysts polled by Thomson Reuters expected the company to earn $0.76 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 1 percent to $1.15 billion from $1.16 billion a year ago, and came below analysts' estimate of $1.19 billion. On a constant currency basis, sales rose 2 percent from the prior year.

Operating margin was 27.9 percent, compared to 28.6 percent reported a year earlier.

As of September 28, 2013, the company's directly-operated store count in North America increased to 548 from 544 as of June 29, 2013.

COH is currently trading at $50.21, down 7.33 percent, on a volume of 2.60 million shares.