Coach Reports Sales Growth

Coach Inc. (NYSE: COH) reported fiscal fourth-quarter earnings Tuesday that its sales rose at the best clip in four years during its latest quarter thanks to its cost-cutting strategy of tightened supply to department stores from its turnaround efforts.

In the latest quarterly financial report ended July 2, coach’s total sales rose 15 percent to $1.15 billion and net income increased to $81.5 million or 29 cents per share, from $11.7 million a year ago. Excluding certain items, earnings per share rose to 45 cents from 31 cents.

The company’s shares, which have risen by more than a quarter this year, were fell 2.48 percent to $40.42 in volatile premarket trading on Tuesday.

In addition, Coach’s subsidiary brand Stuart Weitzman brand, which was acquired last year, brought $84 million to the total sales this quarter, up from $79 million in the previous three months. The growing sales of Stuart Weitzman also contributed from mainland China and Europe, which total international sales climbed 15% from a year earlier.

As sales improved and Coach remained focused on expense management, it lifted its operating margin to 10.1% from 3.9% a year earlier. In their online business, the sales rose just 1%, which is match the online sales in last quarter.

For the year ending next June, Coach said it projects earnings to grow by a double-digit percentage and revenue to increase by a percentage in the low-to-mid single digits in fiscal 2017. Coach expects revenue for the current fiscal year to increase by roughly 2% to 5%. Operating margin should range from 18.5% to 19%, compared with 17.3% in the recently completed year.

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