Highlights from Coach (COH) Q3 Conference Call: Business Stabilizes, Strong International Sales
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Coach (NYSE: COH) is trading up 13% today after announcing solid Q3 results. Coach reported Q3 earnings of $0.38 per share, ex-items, 1 cent better than estimates. Revenues came in at $739.9 million, versus the consensus of $711.4 million. Coach also announced that its Board voted to initiate a cash dividend, at an annual rate of $0.30 per share.
Below are some highlights from Coach Q3 conference call:
- Coach generated sales that were essentially even with prior year and Coach is encouraged by the stabilization of its comparable store sales to pre-Christmas levels in North America.
- Business model continues to generate significant cash flow.
- Coach has 324 full priced and 109 factory stores in operation in North America.
- Full priced stores weak traffic pattern from the previous quarter improved while conversion and average transaction size, both declined modestly from prior year.
- Factory stores continue to see solid traffic and conversion through aggressive pricing.
- Preliminary estimates for calendar year '08 suggest that Coach now holds a 14% share of the Japanese imported accessories market.
- Coach to utilize social networking websites such as facebook and fashion blogs to get the word out on its new youthful Poppy line.
- Increasing proportion of bags introduced at prices below $300. 50% of handbags will be at price points between $200 to $300.
- Long-term growth driver: Store locations in North America and China and focusing on increasing store productivity.
- Opening 20 locations this year as opposed to 40 Coach opened in each of the previous two years.
- In FY10, Coach expects to open about 10 new locations in China, and further out over the next 5 years, COH expects to open a total of over 50 new locations.
- In conclusion, Coach's CEO is encouraged by the stabilization of in COH's business and expects to emerge as a stronger company as the economy rebounds.
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