Coach Q4 Profit Down On Charges, Lower Comps; Yet Matches View

(RTTNews) - Handbags and accessories retailer Coach, Inc. (COH) reported Tuesday a decline in fourth-quarter profit on charges, despite increased revenues. Adjusted earnings per share met analysts' estimates, while sales missed their view due to lower comparable sales in North America.

The company said Mike Tucci, president - North American Group, and Jerry Stritzke, president and chief operating officer are planning to leave the company at the end of August.

The company appointed Francine Della Badia to succeed Tucci as president, North America Retail. Badia is currently serving as executive vice president, responsible for all North America Retail Merchandising, Planning and Allocation as well as Coach's Global Men's and Factory merchandising. David Duplantis, executive vice president, Digital Marketing, has been appointed as president of Global Digital and Customer Experience.

Further, Coach said it has inked a binding agreement to sell the Reed Krakoff business to a group led by Krakoff. The sale may close in the first quarter of fiscal 2014. Krakoff would depart the firm following the sale of the business. The company does not believe the deal to have a material impact to its first quarter fiscal 2014.

Commenting on the results, Lew Frankfort, chairman and chief executive officer, said though it maintained its profitability levels, it is not satisfied with the performance in the Women's handbag and accessories category in North America.

For the fourth quarter, net income totaled $221.34 million, or $0.78 per share, from $251.43 million or $0.86 per share in the previous year.

The latest quarter results included charges of $53 million for unusual items, consisted primarily of corporate restructuring severance-related expenses. Excluding items, adjusted net income amounted to $254 million or $0.89 per share in the latest quarter, while last year's adjusted net income was $251 million or $0.86 per share.

On average, 33 analysts polled by Thomson Reuters expected earnings per share of $0.89 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter reached $1.22 billion, 6 percent higher than last year's $1.16 billion. Analysts estimated revenues of $1.24 billion for the quarter. On a constant currency basis, sales rose 9 percent for the quarter.

Total North American sales increased 6 percent, and North American direct sales rose 5 percent, while comparable store sales were down 1.7 percent. International sales increased 7 percent. On a constant currency basis, international sales climbed 17 percent, mainly with strong China results.

Coach shares are currently trading at $52.53, down $5.32 or 9.20 percent.