China Leads Coach (COH) to Q3 Beat; Indirect Sales Show Slowdown

April 24, 2012 9:50 AM EDT
Shares of Coach (NYSE: COH) are getting "bagged" Tuesday following third-quarter numbers which showed continued growth in China and a pleasantly surprising dividend boost.

Revenue for the luxury brand was $1.11 billion, up 16.7 percent from $950.71 million during the same quarter last year. Net income popped 21 percent to $225 million, or 77 cents per share.

The Street was looking for EPS of 75 cents on revs of $1.10 billion.

North American comps rose 6.7 percent while sales in China rose 60 percent (which Coach attributed to a double-digit rise in comps).

Direct-to-customer sales rose 18 percent while indirect sales increased just 10 percent to $125 million. Coach noted U.S. department store sales were "modestly" down from last year. Indirect sales in the same period last year were up 14 percent to $119 million (though Coach has that number pegged at $114 million in the recent quarter).

CEO Lew Frankfort said the company's Men's unit "remains on track to double to over $400 million this year. Given the success of Men’s, we are now accelerating the roll out of Men’s within existing retail stores."

The Board also voted to boost its quarterly payout 33 percent to an annual run-rate of $1.20 per share, yielding 1.7 percent at today's trading level.

Coach shares are off about 5 percent early Tuesday.

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