Coach Inc. has reportedly beat analysts’ earnings estimates but missed sales estimates for the first fiscal quarter. The decline in sales comes with the brand’s plan lower inventory in overly promotional department stores.
According to an article on Forbes, Coach Inc. has beat analysts’ earnings estimates for the first fiscal quarter but missed sales estimates. The company reported that its earnings per diluted share came in at 45 cents, 1 cent above average estimates. Net income was $177 million, which beat last year’s $96 million.
Net sales were $1.04 billion at an increase of 1%, but declined by 1% on a “constant currency basis,” according to Forbes. Analysts forecasted sales of $1.07 billion. Sales declined because of the company’s lowering of discounts and promotions. That, however, was expected.
Although Coach Inc.’s sales declined, the company’s earnings increase shows the brand’s plans are working.
Coach CEO Victor Luis released a statement saying,
“we are pleased with our performance in the quarter, highlighted by continued positive comparable store sales in North America and growth internationally. Despite this deliberate pullback, we achieved growth across key financials, including sales, gross profit and operating income, as well as double-digit earnings growth.”
Stocks have increased over 2% early trading to about $37.71. The stock has increased about 15% over the past year.
By brand, Coach sales were $950 million, an increase of 1% but a 1% decrease on a constant currency basis. North American sales declined by 3%. The brand’s department store sales declined 30% because of the brand’s lowering of inventory.
Stuart Wietzman had sales of $83 million, just barely beating last year’s $87 million. The brand’s gross profits were $51 million.
Luis also released at statement about Stuart Wietzman saying,
“At Stuart Weitzman, we’re making the key investments in management and creative talent, as well as infrastructure to support long-term, multi-category growth. Importantly, we continue to expect Stuart Weitzman’s sales to increase at a double-digit pace this fiscal year.”
Retailers have also decided to lower the amount of handbags offered by brands, according to an article on The Fashion Law. Luxury retailers like Nordstrom, Bloomingdales, and Barneys New York are offering less handbag styles this holiday season.
This should further help Coach lower inventory in overly promotional department stores. Handbags account for over half of the brand’s sales and this would allow the brand to charge full price for them and would increase sales.
So, what do you think? Will Coach’s sales increase. Let me know in the comments below. Also, don’t forget to subscribe to get new posts sent directly to your inbox and follow me on Facebook, Instagram, and Snapchat.
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