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New York NY, U.S
The New York based leather goods and lifestyle brands Group has reported a good performance for its fourth quarter and full year results for the period ended July 1, 2017, but has missed Wall Street expectations.
Coach’s shares dropped 6% in premarket trading on August 15. The Group said it is projecting full-year fiscal 2018 earnings per share between US$2.35 and US$2.40, below Thomson Reuters expectations of US$2.49 per share. Revenue for fiscal 2018 is projected in the range of US$5.8-5.9 billion, below estimates of US$6 billion in revenue.
In the fourth quarter of 2017, net sales for Coach Inc totalled US$1.13 billion compared with US$1.15 billion in the prior year. Excluding the additional week included in fiscal 2016 results, net sales increased 6% on a reported basis and 7% on a constant currency basis. As planned, the Company’s strategic decision to elevate the Coach brand’s positioning in the North American wholesale channel through a reduction in promotional events and store closures negatively impacted sales growth according to the Group.
Gross profit totalled US$755 million on a reported basis, while gross margin for the quarter was 66.5% on a reported basis against 67.8% in the prior year. On a non-GAAP basis, gross profit totalled US$757 million, while gross margin was 66.8% against 67.8% a year ago.
Net sales for the Coach brand totalled US$1.05 billion in the period compared with US$1.07 billion in the prior year. Excluding the additional week included in fiscal 2016 results, net sales increased 5% on a reported basis and 7% on a constant currency basis. The Stuart Weitzman brand recorded net sales of US$88 million for the fourth fiscal quarter against US$84 million reported in the same period of the prior year, while net sales increased 15% on a reported basis and 16% on a constant currency basis.
On May 8, Coach announced it would acquire Kate Spade for US$2.4 billion in an all-cash deal, which was completed on July 11. Some retail analysts question whether the brand will remain strong and perform as well as expected to meet its goals.