Coach Sees Revenues and Profits Decline in Q3

New York-based luxury-goods company Coach Inc.’s sales and profits took a sizeable hit in Q3 — with profits now below the billion-dollar mark — according the company’s earnings report today. Following the release, the recent Stuart Weitzman acquirer’s stock declined more than 7 percent.

Net Income: The company said its reported net income totaled $88.1 million, down 54 percent from the prior year’s Q3 net income of $190.7 million.

EPS: Coach reported earnings per diluted share of 32 cents compared with earnings per diluted share of 68 cents in the prior year’s third quarter.

Adjustments: Excluding transformation-related costs, net income would have been $100 million, or 36 cents per diluted share.

Net Revenue: Sales fell 15 percent, to $929.3 million, from the prior year’s Q3 sales of $1.10 billion. The company said its revenue would have been 3 percent higher excluding currency impacts.

Hit, Miss or Beat: Coach missed Wall Street’s predictions for both sales and EPS. Analysts polled by Yahoo Finance predicted EPS of 35 cents per share, and Coach’s EPS was 3 cents shy or a slight beat excluding transformation-related costs. Analysts estimated revenues of around $949.9 million, which the company missed by about $20 million.

Executive Insights: CEO Victor Luis said of Stuart Weitzman and footwear on the company’s April 28 conference call:

“In the weeks ahead, we look forward to completing the acquisition of Stuart Weitzman, a luxury footwear brand that we believe has significant domestic and international growth potential. Specifically, we will leverage Coach’s international infrastructure and expertise in handbags and accessories to develop Stuart Weitzman’s handbag and accessories business, and in turn, Coach will benefit from the Stuart Weitzman’s teams in footwear and development.”

“As we prepare for the integration of Stuart Weitzman, we have renewed Coach’s women’s footwear license with Jimlar for the next two years. This will allow us to develop the multi-brand infrastructure and systems necessary to bring the category in-house. We are very excited about our first acquisition and look forward to welcoming the Stuart Weitzman brand and organization into the Coach Inc. family.”

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