Coach Inc. is seeing how its strategy to broaden its men's business with more male-oriented products and open men's stores in the U.S. and Japan is paying off: sales jumped 17% to $1.11 billion for the quarter and reported a profit of $225 million, or 77 cents a share. These compare with $186 million, or 62 cents, a year earlier. Excluding items such as tax adjustments and charitable contributions, earnings were 62 cents a share in the year-earlier quarter.
Analysts polled by Thomson Reuters had most recently forecast earnings of 75 cents on revenue of $1.11 billion.
"Internationally, our directly-operated businesses are also growing rapidly with China continuing to post excellent gains, remaining on course to generate at least $300 million in sales this year. As previously noted, in January we took control of our domestic retail business in Taiwan, and will be acquiring our Malaysian retail business in July. In addition, we are very pleased to announce that we have signed an agreement to take control of our domestic retail business in Korea effective in early FY13," explained Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc in a statement.
Sales were up 10% in Japan, on a constant-currency basis. China, which the company has called its largest geographic growth opportunity, saw sales grow 60%, driven by distribution growth and double-digit same-store sales. Indirect sales rose 10% to $125 million.
"We're also excited about the results we're achieving globally in our Men's business, which remains on track to double to over $400 million this year. Given the success of Men's, we are now accelerating the rollout of Men's within existing retail stores. By the end of this fiscal year, we expect to have a broader expression of Men's in nearly 100 Coach retail stores in North America, up from 42 at the end of the third quarter. Outside the U.S., where Men participate in the category at a higher rate, new dual gender and dedicated men's shops are the primary distribution growth vehicles," added Frankfort.
Finally, the company looks hopeful to the rest of the year, increasing its cash dividend by 33%, raising it to an annual rate of $1.20 per share starting with the dividend to be paid to stockholders in July 2012. "Our excellent results this quarter and the trends we're continuing to experience reflect the vibrancy of the Coach proposition. Given the strength of our business, we remain confident in our ability to continue to drive sales and earnings at a double-digit pace over our planning horizon," Frankfort concluded.