Coach sales decline in Q3

Worldwide
Published:  08 May, 2017

Net sales for the Coach brand declined 4% in the third fiscal quarter, consistent with expectations, and the company says it continued to drive growth in the directly-operated Europe and Mainland China businesses, its main markets, over the period.

Sales for the Coach brand totalled US$915 million for the third fiscal quarter, representing a decrease of approximately 4% on a reported and constant currency basis, as the planned strategic actions in the North America wholesale channel are said to have negatively impacted sales growth. Operating income for the quarter on a reported basis totalled US$151 million, up +13%, while operating margin was 15.2% versus 13%. Gross profit for the Coach brand totalled US$656 million, down -2% on a reported and non-GAAP basis. 

Sales in North America declined 5% in the period, while Greater China sales declined 2% year-on-year in dollar terms and increased 2% on a constant currency basis, driven by strong growth and positive comparable store sales in Mainland China, offset by continued softness in Hong Kong and Macau. In Japan, sales rose 2% in dollars and decreased 1% in constant currency. Sales in the directly operated channels in Europe are said to have remained strong, growing at a double-digit rate in constant currency, while total sales decreased modestly in dollar terms and rose slightly in constant currency. Overall international wholesale is reported to have declined on a net sales basis due to shipment timing with the fourth quarter, while POS sales also declined.

As for the footwear brand Stuart Weitzman, sales totalled US$80 million for the third fiscal quarter compared with US$79 million reported in the same period of the prior year, an increase of 1%, impacted by wholesale shipment timing according to the company. Gross profit for the brand totalled US$50 million, up 8% versus prior year.

According to Victor Luis, CEO, Coach: “We continue to expect sales to increase at a double-digit pace for both the fourth quarter and the year. We’re also making key brand investments in management and creative talent, as well as infrastructure to support long-term, multi-category growth.”

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