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Coach Q1 earnings rise nearly 15% on strong sales, well positioned for holiday season

Published: 19:10 25 Oct 2011 BST

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Luxury handbag maker, Coach (NYSE:COH) said Tuesday it is well positioned for the up-coming holiday season, after reporting that its first quarter profits rose nearly 15 percent on strong sales.

For the three months ending October 1, the New York-based company posted net income of $214.98 million, or $0.73 per share, up 14 percent from $188.88 million, or $0.63 per share, a year ago.

Revenues rose 15 percent to $1.05 billion, from $911.67 billion in the same period last year.

Coach CEO Lew Frankfort said: "Our strong results this quarter once again reflect the strength of our brand proposition and the vitality of the category, as our customers look to update their wardrobes through our lifestyle accessories offering.

"Given the current momentum of our business, strength of our product pipeline, breadth of our assortment and shoppers’ strong interest in accessories for gifts and self-purchase, Coach is clearly well positioned for another excellent holiday season."

Comparable store sales, or those locations open for at least one year, rose nine percent in North America, while rising at a double-digit rate in China. Sales through the company's direct-to-consumer business increased 17 percent on a same store basis, to $910 million.

Indirect sales increased four percent to $140 million in the quarter, largely on higher shipments into international wholesale and U.S. department stores.

Coach also said that much of its revenues came from its entrance into the Men's accessories market.

"Over the last several months, we have experienced excellent response to our new Men’s products – both in dedicated stores and in dual-gender locations - as we capitalize on our long-standing heritage in this business," Frankfort added.

Gross margins during the quarter fell to 72.8 percent in the fiscal first quarter, from 74.2 percent in the year-ago period.

In other news, the company also said that it repurchased and retired nearly 1.1 million shares of its common stock. At an average purchase price of $55.30, total consideration for the buybacks was $59 million. At the start of this month, about $900 million remained under Coach's current repurchase program.

In New York, Coach shares fell less than one percent to $62.06, as of 2:02 pm EDT.

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