Highlights from Coach (COH) Q3 Conference Call: Business Stabilizes, Strong International Sales

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April 21, 2009 1:31 PM EDT

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.