Jan 21, 2009
Coach posts lower profit, cuts expansion plans
Jan 21, 2009
* Q2 EPS 67 cts meets Wall Street's lowered estimate
* Q2 sales fell 2 pct to $960 mln
* Halves North America 2010 store expansion plans (Adds details on expansion, outlook, CEO quote)
NEW YORK, Jan 21 (Reuters) - U.S. handbag maker Coach Inc (COH.N) reported lower quarterly profit on Wednesday, hurt by the slowdown in consumer spending that made the 2008 holiday season the retail industry's weakest in decades, and cut back on expansion plans.
(Reporting by Deepa Seetharaman)
Chief Executive Lew Frankfort said 2008 was the "most difficult holiday season our company has experienced during my 30-year tenure."
He added that heavy industry-wide promotions hurt sales at Coach stores as well as at department stores.
Net income for its fiscal second quarter, ended Dec. 27, fell to $216.9 million, or 67 cents per share, from $252.3 million, or 69 cents per share, a year earlier.
The profit met analysts' estimates, which were cut earlier this month after the maker of high-end bags, wallets and accessories warned that its earnings for the critical holiday quarter would fall due to the challenging retail environment.
Quarterly sales fell nearly 2 percent to $960 million.
Analysts on average were expecting earnings of 67 cents per share on revenue of $958.9 million, according to Reuters Estimates, based on the company's lowered forecast.
Coach's earlier forecast had called for second-quarter earnings of 77 cents per share on sales of $1.05 billion.
The New York-based company halved its fiscal 2010 North American expansion plans, saying it intends to open about 20 new locations instead of its former plan for 40 new stores a year. It said it will also suspend retail store expansions.
Coach did not provide an earnings outlook for the rest of the fiscal year, but tried to assure investors that it is financially solid by pointing out that it has an essentially debt-free balance sheet and a significant cash position.
Despite lower overall spending, Coach said it is increasing its share of the U.S. handbag and accessory market.
Coach shares closed at $15.87 on Tuesday on the New York Stock Exchange, down 58 percent from a 52-week high touched in May. (Reporting by Martinne Geller; Editing by Derek Caney and Gerald E. McCormick)
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