Coach Third Quarter Profits Slipped

For the 7 quarter of a row, the rapid contraction of the same store sales in North American markets has led the industry to see the future of its brand. Barrons Barron weekly website commented that the market value of Coach Inc. will continue to depreciate due to its small market share. What is more worrying for the market is that the company said it would have similar sales in the three quarter.

Coach Inc. issued the three quarter earnings report, although the adjusted $0.36 EPS slightly exceeded the "Flower Street" analyst's average expected $0.35, but the group's earnings of $929 million 300 thousand in quarterly earnings were lower than analysts expected $949 million 900 thousand, especially in the main market North American market 23% double-digit decline continued to lose market share, investors disappointed, weak performance opened the stock to 5%, and then continued to widen the decline, no fashion Chinese net release time EDT 11:58AM decline widened to 7.11% 39.32 dollars.

In the three quarter of March 28, 2015, net profit of Coach Inc. was recorded at $88 million 100 thousand, down 53.8% from 190 million 700 thousand US dollars in the same period last year, and the earnings per share recorded 0.32 US dollars, down 53% from 0.68 a year earlier.

Calculated on the basis of non GAAP, Coach Revenue in the third quarter was $146 million, compared with $263 million in the same period last year. The operating profit margin was 15.8%, compared with 23.9% in the same period last year. The gross margin for the quarter was $665 million based on non GAAP basis, compared with $781 million a year earlier. Gross profit margin was 71.6%, compared with 71.1% in the same period last year. On the basis of non GAAP, sales, general and administrative expenses accounted for 55.8% of net sales, compared with 47.2% in the same period last year.

In the current quarter, Coach reported $124 million in operating income and a profit margin of 13.3%. The gross margin of financial reporting is $665 million, gross margin is 71.6%, and marketing, general and administrative expenses account for 58.3% of net sales.

In the nine months ended March 28, 2015, the net sales of the company amounted to $3 billion 190 million, a decrease of 13% compared with the $3 billion 670 million recorded in the first nine months of fiscal year 2014. At a constant exchange rate, sales fell by 11% over the same period last year. The net income before unrelated brand transformation related measures and acquisition costs was $446 million per share. Diluted earnings It's 1.61 dollars. During the nine months, the net income reported in the financial statements was $391 million, and the diluted earnings per share were $1.41, compared with the net income reported in the first nine months of last year, which was $706 million and diluted earnings per share were $2.51.

In the third quarter of the 2015 fiscal year, the company recorded a cost of $23 million related to a number of years of brand transformation plan, mainly including accelerated depreciation due to the refurbishment of the store, and store Closing related termination fee and raising the cost of organization efficiency. These measures increased the marketing, general and administrative expenses of the company in the third quarter by $23 million, and the net income after tax reduced by US $12 million or the diluted earnings per share decreased by US $0.04. In the first nine months of fiscal year 2015, the company recorded a total cost of $80 million due to the brand transformation plan, which resulted in an increase of $75 million in sales, general and administrative expenses in the first nine months, an increase of 5 million US dollars in sales cost, and a decrease of 53 million US dollars in net income after tax or a decrease of 0.19 dollars in diluted earnings per share. In addition, in the second quarter, the company recorded a cost of $4 million related to the acquisition of Stuart Weitzman, which reduced the net income of the company after tax reduction by $2 million or diluted earnings per share by $0.01.

It is worth noting that if the effect of exchange rate is excluded, the Coach reported sales will increase by 3%. In the 100 million quarter of this quarter, the net income before the brand transformation related initiatives was $0.36, and the diluted earnings per share were $0.36.

Victor Luis, chief executive of Coach, said: "despite the negative impact of foreign currency exchange rate fluctuations on our sales, we are pleased to see that the third quarter performance is in line with the plan and annual guidelines. Like the second quarter, Coach is committed to promoting continuous improvement of the entity store business in North America and further reducing the promotional activities of official online sale shops.

In addition, according to the constant exchange rate, Coach international business recorded a moderate growth, and the business in Europe and China achieved double-digit growth. "As we continue to introduce and refurbish stores in the global fashion and luxury concept, and successfully introduce Stuart Vevers product lines into the special store outlets, and the third enthusiastic participation in New York fashion week, our brand transformation program is continuing to push through three major areas.