Coach Inc (COH) recently stated second quarter results for the period ended December 31, 2016.
Victor Luis, Chief Executive Officer of Coach, Inc., said, “We are both happy and proud of our performance this holiday season, particularly in light of the challenging and volatile global retail environment. Our team delivered top-line growth in each of our reportable segments, highlighted by positive comparable store sales in North America and overall gross margin expansion. We continued to grow our business internationally, with notable strength in Europe and Mainland China, which represent noteworthyopportunities for our brands. Importantly, we opened key global flagship locations on Fifth Avenue in New York City and Regent Street in London, which embody our modern luxury vision and celebrate our heritage and 75-year history of craftsmanship. And, despite our deliberate pullback in the North America wholesale channel and currency headwinds, we delivered double-digit earnings growth in the quarter.”
Overview of Second Quarter 2017 Merged, Coach, Inc. Results:
Net sales totaled $1.32 billion for the second fiscal quarter, a boost of 4% over prior year on a stated basis, counting a benefit of 40 basis points related to currency translation. As expected, the Company’s planned decision to elevate the Coach brand’s positioning in the North American wholesale channel through a reduction in promotional events and door closures negatively influenced sales growth by about 100 basis points in the quarter.
Gross profit totaled $906 million, a boost of 5% on a stated basis and 6% on a non-GAAP basis. Gross margin for the quarter was 68.6% contrast to 67.4% in the year ago period on both a stated and non-GAAP basis.
SG&A expenses totaled $629 million on a stated basis, a boost of 5%, and represented 47.6% of sales contrast to 47.0% in the year-ago quarter. As forecasted, on a non-GAAP basis, SG&A expenses were $612 million, a boost of 7%, or 46.3% of sales as contrast to 45.1% in the year ago period, reflecting in part the impact of currency and the Company’s continued investment in Stuart Weitzman, in addition to higher marketing spend as contrast to prior year.
Operating income for the quarter on a stated basis totaled $277 million, a boost of 6%, while operating margin was 21.0% as contrast to 20.5%. On a non-GAAP basis, operating income was $294 million, a boost of 3%, while operating margin was 22.3% as contrast to 22.4%.
Net interest expense was $5 million in the quarter as contrast to $6 million in the year ago period.
Net income for the quarter on a stated basis totaled $200 million, with earnings per diluted share of $0.71. This contrast to stated net income in the second quarter of FY16 of $170 million with earnings per diluted share of $0.61. On a non-GAAP basis, net income for the quarter totaled $211 million contrast to $189 million a year ago, a boost of 12%, with earnings per diluted share of $0.75, up 11% as contrast to prior year.
Coach Brand Second Quarter of 2017 Results:
Net sales for the Coach brand totaled $1.20 billion for the second fiscal quarter, a boost of about 2% on a stated and constant currency basis. As expected, the planned actions in the North America wholesale channel negatively influenced sales growth by about 100 basis points.
Second fiscal quarter sales results in each of Coach’s primary segments were as follows:
Total North American Coach brand sales raised 2% on both a stated and constant currency basis to $744 million as contrast to $731 million last year. North American direct sales rose 5% for the quarter. Total North American bricks and mortar comparable store sales rose about 4%, while aggregate North American comparable store sales raised about 3%, counting the negative impact of e-commerce. As planned, sales at North American department stores declined about 30% on both a POS and net sales basis.
International Coach brand sales rose 3% to $448 million on a stated basis from $437 million last year and 1% on a constant currency basis. Greater China sales were about even with prior year in dollars and raised 6% on a constant currency basis. This sales growth was driven in part by positive comparable store sales overall with continued strength in Mainland China. In addition, Hong Kong and Macau practiced a noteworthyimprovement in the quarter from previous trends. In Japan, sales rose 9% in dollars and reduced 2% in constant currency, influenced by a decline in Chinese tourist spend, lapping last year’s dramatic increase. Sales for the remaining directly-operated businesses in Asia reduced low-single digits on a stated and constant currency basis. Europe remained strong, growing at a double-digit rate in both total and comparable store sales. At POS, sales in international wholesale locations raised slightly, driven by strong domestic performance offset in part by relatively weaker tourist location results, while net sales into the channel reduced from the prior year influenced by shipment timing.
Gross profit for the Coach brand totaled $830 million, a boost of 4% on a stated and non-GAAP basis. Gross margin for the quarter was 69.0%, counting about 30 basis points of benefit from currency, as contrast to 67.7% in the prior year period.
SG&A expenses totaled $566 million for the Coach brand on a stated basis, up 2% as contrast to prior year, and represented 47.0% of sales contrast to 47.1% of sales in the prior year’s second quarter. On a non-GAAP basis, SG&A expenses were $559 million, a boost of 4%, and represented 46.5% of sales as contrast to 45.4% in the year ago period.
Operating income for the Coach brand on a stated basis was $264 million, up 9%, while operating margin was 21.9% contrast to operating margin of 20.6% a year ago. On a non-GAAP basis, operating income was $271 million, a boost of 3%, while operating margin was 22.5% contrast to operating margin of 22.3% on a non-GAAP basis a year ago.
LKQ Corporation (LKQ) will release fourth quarter and full year 2016 financial results before the market opens on Thursday, February 23, 2017.
Conference Call Details
At 10:00 a.m. Eastern Time (9:00 a.m. Central Time) members of senior administration will host a conference call and Webcast to discuss the Company’s results. To access the shareholder conference call, please dial (877) 201-0168. International access to the call may be obtained by dialing (647) 788-4901.
Webcast and Presentation Details
The audio webcast and accompanying slide presentation can be accessed at www.lkqcorp.com in the Shareholder Relations section.
A replay of the conference call will be available by telephone at (800) 585-8367 or (416) 621-4642 for international calls. The telephone replay will require you to enter conference ID: 48305196#. An online replay of the audio webcast will be available on the Company’s website. Both formats of replay will be available through March 9, 2017. Please allow about two hours after the live presentation before attempting to access the replay.