Despite a tough retail environment, volatility in tourist spending and macroeconomic headwinds, Coach, Inc. (COH – Analyst Report) posted better-than-expected first-quarter fiscal 2017 bottom-line results. The company’s adjusted earnings of 45 cents a share beat the Zacks Consensus Estimate by a penny, thereby resulting in a positive earnings surprise of 2.3% and marking the 11th straight quarter of earnings beat. The quarterly earnings also increased roughly 10% year over year.
Net sales of this New York-based company came in at $1,037.6 million, up about 1% year over year but short of the Zacks Consensus Estimate of $1,065 million. On a constant currency basis, sales of this designer and marketer of fine accessories and gifts as well as house of lifestyle brands decreased at an equivalent rate.
Coach registered the second consecutive quarter of positive comparable-store sales at its North American segment. The company’s international operations witnessed robust growth.
The company is undergoing a brand transformation and is introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman has been accretive to its performance, and is being viewed as a significant step in its efforts toward becoming a multi-brand company. Management highlighted that net sales for the Coach brand aggregated $950 million, while that of Stuart Weitzman brand totaled $88 million for the quarter.
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Behind the Headline
Total North American Coach brand sales declined 3% on both reported and constant currency basis to $545 million. Direct sales remained even on a dollar basis. Total North American bricks and mortar comparable store sales jumped about 4%, while aggregate North American comparable store sales grew approximately 2%, including the adverse impact of E-commerce on account of the decline in the company’s eOutlet flash sale business. On both POS and net sales basis, North American department stores sales plunged approximately 30%.
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