|Coach Reports Fourth Quarter and Fiscal Year Earnings Per Share of $0.68 and $2.92, Respectively|
NEW YORK, Aug 02, 2011 (BUSINESS WIRE) -- Coach, Inc. (NYSE: COH), a leading marketer of modern classic American accessories, today reported sales of $1.03 billion for its fourth fiscal quarter ended July 2, 2011, an increase of 17% from the same period the prior year on a comparable, non-GAAP basis - excluding the 14th week from the fourth quarter of fiscal 2010. Similarly, net income rose 18% to $202 million and diluted earnings per share increased 22% to $0.68. On a reported basis, sales rose 9%, net income rose 4% and earnings per share gained 7%.
For the fiscal year, on a comparable, non-GAAP basis - excluding the 53rd week in fiscal 2010 - net sales rose 18% to $4.16 billion and net income increased 24% to $881 million versus the prior fiscal year. In addition, diluted earnings per share rose 30% to $2.92. On a reported basis, sales rose 15%, net income gained 20% and earnings per share increased 26% from fiscal 2010.
Results for the fourth quarter and fiscal year ended July 2, 2011 included 13 and 52 weeks, respectively, while the same periods in fiscal 2010 included 14 and 53 weeks, respectively. As noted at the time, the 53rd week contributed about $70 million to 2010 fourth quarter and fiscal year sales, $24 million to net income and about $0.08 to earnings per share in both periods. In addition, during the third quarter of fiscal 2011, the company recorded certain unusual items. They included a favorable settlement of a multi-year tax return examination, which resulted in a substantially lower third quarter tax rate of 26.5%, and which decreased Coach's provision for taxes by $16 million. In addition, the company made contributions of $21 million to the Coach Foundation, and $5 million to the Japanese Red Cross, respectively. Together these contributions totaled nearly $26 million pre-tax, impacting SG&A expenses by that amount, and precisely offsetting the benefit of the tax settlement to net income and earnings per share.
Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc., said, "I'm extremely pleased with our fiscal fourth quarter and full year results. We're continuing to drive sales through higher productivity and distribution expansion, globally. In North America, where revenues grew 17% for the quarter and the fiscal year on a comparable basis, we are increasing our share of a growing accessories market. At the same time, the contribution of our international businesses in China and other East Asian markets is accelerating. Our strong performance also reflects the success of our renewed focus on Men's - drawing on our long heritage in the category - and our digital strategies, as we continue to build the foundation for strong top and bottom line results in the years ahead."
For the quarter, operating income totaled $312 million, 5% above the $297 million reported in the year-ago period, while operating margin was 30.3% versus 31.2% reported for the prior year. During the quarter, gross profit rose 6% to $740 million from $697 million reported a year ago while gross margin was 71.8% versus 73.3%. SG&A expenses, as a percentage of net sales, totaled 41.5%, compared to the 42.1% reported in the year-ago quarter.
For the full year, operating income totaled $1.30 billion, 14% above the $1.15 billion reported in the year ago period, while operating margin was 31.4% versus 31.9% for the prior year. During the year, gross profit rose 15% to $3.02 billion from $2.63 billion a year ago. Gross margin was 72.7% versus 73.0% a year ago. SG&A expenses, as a percentage of net sales, totaled 41.3%, compared to the 41.1% reported in fiscal 2010.
The company also announced that during the fourth fiscal quarter, it repurchased and retired about 6.3 million shares of its common stock at an average cost of $60.08, spending a total of $381 million. At the end of the period, approximately $962 million remained under the company's present repurchase authorization.
Fourth fiscal quarter and full year sales grew in each of Coach's primary channels of distribution as follows:
During the fourth quarter of fiscal 2011, the company opened three North American retail stores - including the first Men's mall store at Copley Plaza - and closed two others, while opening nine factory stores - including six dedicated Men's stores. This brought the total to 345 retail stores and 143 factory stores in North America as of July 2, 2011. In Japan, Coach opened a shop-in-shop location and a Men's factory location. Therefore, at the end of the quarter there were 176 total locations in Japan. There were 11 new locations opened in China during the fourth quarter, bringing the total Coach China locations to 66.
"As always, we expect to continue to drive our business through a combination of productivity gains worldwide and distribution growth, both in North America as well as internationally, where China remains our biggest opportunity. We're also pleased to announce the transition of Singapore to a direct business, with Malaysia planned to occur at the end of this fiscal year. In addition, we have recently signed distribution deals for Brazil and Vietnam, with the first openings targeted for late this calendar year."
"Beyond expansion, we're leveraging the Men's opportunity, where we've been increasing our exposure globally through both dedicated Men's locations and dual-gender stores. Results have been strong, with the business doubling in fiscal 2011, underscoring our belief that Men's will be a significant contributor to our performance in the seasons and years ahead."
"Entering fiscal 2012, we remain confident in our growth prospects and ability to drive sales and earnings per share at a double-digit pace, given the current strength of the Coach business and our increasing global expansion," Mr. Frankfort concluded.
Coach will host a conference call to review these results at 8:30 a.m. (EDT) today, August 2, 2011. Interested parties may listen to the webcast by accessing http://www.coach.com/investors on the Internet or dialing into 1-888-405-2080 and asking for the Coach earnings call led by Andrea Shaw Resnick, SVP of Investor Relations. A telephone replay will be available starting at 12:00 noon today, for a period of five business days. The number to call is 1-866-352-7723. A webcast replay of the earnings conference call will also be available for five business days on the Coach website.
Coach, with headquarters in New York, is a leading American marketer of fine accessories and gifts for women and men, including handbags, women's and men's small leathergoods, business cases, weekend and travel accessories, footwear, watches, outerwear, scarves, sunwear, jewelry, fragrance and related accessories. Coach is sold worldwide through Coach stores, select department stores and specialty stores, through the Coach catalog in the U.S. by calling 1-800-223-8647 and through Coach's website at http://www.Coach.com. Coach's shares are traded on The New York Stock Exchange under the symbol COH.
This press release contains forward-looking statements based on management's current expectations. These statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "intend," "estimate," "are positioned to," "continue," "project," "guidance," "forecast," "anticipated," or comparable terms. Future results may differ materially from management's current expectations, based upon risks and uncertainties such as expected economic trends, the ability to anticipate consumer preferences, the ability to control costs, etc. Please refer to Coach's latest Annual Report on Form 10-K for a complete list of risk factors.
SOURCE: Coach, Inc.