Coach Q3 2016 Earnings And Revenue Beats Expectations

Highlights Of The Quarter:

1) Turnaround of Coach’s North American Business

• Same-store sales at the retail stores were unchanged, after a number of quarters of negative comps, representing the fourth consecutive quarter of improvement.
• While store and mall traffic was soft, due to increased internet sales, more was spent per customer versus a year prior.
• Positive comps were seen in the renovated luxury concept retail outlets.
• Low single-digit growth in the North American premium women’s handbag and accessories market.
• Higher premium handbag purchases, as compared to six months ago.
• The above $400 price bracket rose in penetration, forms ~40% of handbag sales, up from ~30% last year.
• Handbag AUR (Average Unit Retail) has risen to over $300 in the quarter, for the first time since FY 2009.

2) Chinese Market And Chinese Tourists Driving International Sales

• Greater China third quarter sales increased 2%.
• This was driven by double-digit growth and positive comps on the Mainland, offset by weakened markets in Hong Kong and Macau due to a slowdown in inbound tourist traffic from the Mainland.
• Annual sales forecast of $600M, reflecting continued softness in Hong Kong and Macau.
• Decline in Chinese tourists to North America and Europe, notably France, affected performance there.
• Growth in Chinese tourist spending in Japan, Korea, and Southeast Asia resulted in high growth.
• Japan sales grew by 7% on a constant currency basis, benefiting from increased Chinese tourist traffic and a positive response to the new modern luxury stores.

Have more questions on Coach? See the links below:

• What To Expect From Coach In Q3 FY 2016?
• Is Coach’s Transformation Plan Working?
• What Is The Breakdown Of The Charges Associated With Coach’s Transformation Plan?
• What is Coach’s Revenue And EBITDA Breakdown?
• Coach: Year 2015 In Review
• How Has Coach’s Revenue And EBITDA Composition Changed In The Last 3 Years?
• Is The Men’s Segment Becoming Big Business For Coach?
• By What Percentage Did Coach’s Revenue & EBITDA Decline In The Last 3 Years?
• How Will Coach’s Revenue And EBITDA Change In The Next 3 Years?
• What Is Coach’s Fundamental Value Based On Expected 2016 Results?

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