Coach's Turnaround: Too Little, Too Late
NEW YORK (TheStreet) - Good cost control helped Coach
Early Tuesday, Coach reported first-quarter profit of $218 million, or 77 cents a share, compared with $221 million, or 77 cents a share, in the year-earlier quarter. Wall Street was expecting the company to earn 76 cents. Net sales slipped to $1.15 billion in the September-ending quarter, below analysts' expectations of $1.19 billion.
Internationally, even though total sales slipped to $365 million, on a constant currency basis, sales rose about 9%, Coach said. Sales in China specifically remained very strong, up 35%, with comparable sales up double-digit rates, offsetting declines in Japan.
However, it was the sales comps at Coach's U.S. stores that have investors worried. The company said total North American sales fell 1% to $778 million in the quarter. Comparable store sales declined 6.8% in the quarter, worse than expected. U.S. direct sales were down 1%, as well as department store sales in the U.S., which were also down modestly from the prior year.
Shares fell 7.9% on Tuesday to $49.88, with the stock struggling throughout 2013. Shares are down 0.60% year-to-date as of Monday's closing price, vastly underperforming the S&P 500.