Things are improving for Coach Inc.
The company today reported better-than-expected second-quarter earnings, while revenues edged up 4 percent year-over-year.
As of 11:50 a.m. ET, the firm’s shares were up nearly 3 percent, to $37.01.
Coach said its Q2 reported net income rose 18 percent, to $200 million, or 71 cents per diluted share. Adjusted net income gained 12 percent year-over-year, to $211 million, or 75 cents per diluted share, a penny above forecasts predicting diluted earnings per share of 74 cents.
Revenues climbed 4 percent, to $1.3 billion, which was in line with estimates. North America comparable store sales for the Coach brand also increased 3 percent, while its net sales rose 2 percent, to $1.2 billion.
“We are both pleased and proud of our performance this holiday season, particularly in light of the challenging and volatile global retail environment,” Coach CEO Victor Luis said in a release. “Our team delivered top-line growth in each of our reportable segments, highlighted by positive comparable store sales in North America and overall gross margin expansion.”
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Luis added that the brand also saw strength in international markets, particularly in Europe and Mainland China.
“And, despite our deliberate pullback in the North America wholesale channel and currency headwinds, we delivered double-digit earnings growth in the quarter,” he said.
Net sales for the Stuart Weitzman brand grew 26 percent, to $118 million, which the company said was driven by strong growth in the directly operated channels as well as a positive impact from a wholesale shipment timing shift from the first quarter.
“We were also thrilled with Stuart Weitzman’s results this quarter as we continued to implement our strategic priorities for the brand,” Luis said. “We advanced our leadership position in fashion boots and booties during the key winter selling season, while driving global awareness and brand relevance through impactful marketing and the launch of key global flagships alongside the Coach brand openings on Fifth Avenue in New York and Regent Street in London.”
The company maintained its operational outlook for fiscal 2017, but adjusted its revenue guidance based on current exchange rates.
Coach’s previous fiscal revenue guidance called for an increase of low-to-mid single digits, including an expected benefit from foreign currency of approximately 100-150 basis points. Given the strengthening of the U.S. dollar, the company said it now expects revenue to increase low-single digits, including an expected negative impact from foreign currency of 50 basis points for the full fiscal year or more than 100 basis points of pressure for the second half of the fiscal year based on current exchange rates.