Coach Inc. (COH) Issues Quarterly Earnings Results

On the company’s financial health, Coach Inc reported $0.44 EPS for the quarter, beating the analyst consensus estimate by $ 0.03 according to the earnings call on April 26, 2016. At best a mixed bag, and combined with the lower-than-expected revenues for the quarter and the full 2016 fiscal year will probably weigh on shares in Tuesday trading. Its forecasts over growth are 0.50% during current year while analysts’ growth estimation for the next year is 14.00%. The Company operates through three segments: North America, which includes sales to North American consumers through Coach-branded stores (including the Internet) and sales to wholesale customers; global segment, which includes sales to consumers through Coach-branded stores (including the Internet) and concession shop-in-shops in Japan and mainland China, Coach-operated stores and concession shop-in-shops in Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Belgium and the Netherlands, as well as sales to wholesale customers and distributors in approximately 45 countries, and Other segment, which consists of sales and expenses generated by the Coach brand in other ancillary channels, including licensing and disposition. “Their store environments, service levels, and discounting policies are increasingly out of kilter with the strategic priorities of Coach, and brands like it”.

Coach has also slashed the number of department stores it sells to, which reduced net sales at these stores by high single-digit percent in the fourth quarter, the company said.

Coach, a 75-year-old brand once associated with high-end luxury and top celebrities, has been facing intense competition from newer entrants such as Michael Kors Holdings Inc and Kate Spade & Co.

Investors who had bid Coach stock up 25% since the start of the year had been looking for even stronger growth. Coach has a 52 week low of $27.22 and a 52 week high of $43.71.

North America outlet stores, which have been hurt by a pullback in tourist spending, pose another challenge. During the same quarter in the previous year, the company posted $0.36 EPS.

But one aspect of Coach’s business is seriously slowing down its revival: department stores.

The 75-year-old company, which got more than half of its total sales from the region, has been working to revive sales by renovating stores and appointing well-known fashion designers such as Stuart Vevers to its creative team. Earnings for the quarter ended July 2 rose to $81.5 million, or 29 cents a share, from $11.7 million, or 4 cents a share, in the same period a year ago. Past 5 years growth of Coach Inc (NYSE:COH) observed at -13.00%, and for the next five years the analysts that follow this company are expecting its growth at 8.91%.

-Lisa Beilfuss contributed to this article.