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Coach Reports Second Quarter Earnings Of $1.18, Up 18% On A 15% Sales Increase

Stocks in this article: COH

Mr. Frankfort continued, “We were especially pleased with our ongoing strength in North America during the holiday season, as total revenues rose 15%. This growth indicates that we are continuing to increase our share of an expanding U.S. accessories market. In our direct-to-consumer businesses, all channels benefited from our innovative digital media strategy, spanning our own websites, mobile platform and social media, which enabled customers to purchase wherever they preferred to engage with our brand."

“Internationally, our directly-operated businesses are also growing nicely, as China continues to post excellent gains and remains on track to generate at least $300 million in sales this year. Just after the quarter, and consistent with our strategy of directly operating select Asian markets, we took control of our domestic retail business in Taiwan. As previously discussed, we will be acquiring our Malaysian retail business in July.”

“We’re also excited about the results we’re achieving in our Men’s business, which is on track to double in FY12, to over $400 million globally. Coach Men’s has been successful across all concepts and store types and in all geographies and channels. Our strong performance underscores the opportunity to both expand our distribution through new locations and to drive productivity by broadening the offering of compelling Men’s product in existing real estate.”

“Our strong results this quarter reflect the strength of the Coach proposition and the continued relevance of the category. Given the strength of our business, we remain confident in our ability to continue to drive sales and earnings at a double-digit pace over our planning horizon,” Mr. Frankfort concluded.

Coach will host a conference call to review second fiscal quarter results at 8:30 a.m. (ET) today, January 24, 2012. Interested parties may listen to the webcast by accessing www.coach.com/investors on the Internet or dialing into 1-888-405-2080 or 1-210-795-9977 and asking for the Coach earnings call led by Andrea Shaw Resnick, SVP of Investor Relations & Corporate Communications. A telephone replay will be available starting at 12:00 noon today, for a period of five business days. The number to call is 1-866-352-7723 or 1-203-369-0080. A webcast replay of this call will be available for five business days on the Coach website.

Coach, with headquarters in New York, is a leading American marketer of fine accessories and gifts for women and men, including handbags, men’s bags, women’s and men’s small leathergoods, weekend and travel accessories, footwear, watches, outerwear, scarves, sunwear, fragrance, jewelry and related accessories. Coach is sold worldwide through Coach stores, select department stores and specialty stores, and through Coach’s website at www.coach.com. Coach’s common stock is traded on the New York Stock Exchange under the symbol COH and Coach’s Hong Kong Depositary Receipts are traded on The Stock Exchange of Hong Kong Limited under the symbol 6388.

Neither the Hong Kong Depositary Receipts nor the Hong Kong Depositary Shares evidenced thereby have been or will be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to, or for the account of, a U.S. Person (within the meaning of Regulation S under the Securities Act), absent registration or an applicable exemption from the registration requirements. Hedging transactions involving these securities may not be conducted unless in compliance with the Securities Act.

This press release contains forward-looking statements based on management's current expectations. These statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "intend," "estimate," "on track," "are positioned to," "continue," "project," "guidance," “target,” "forecast," "anticipated," or comparable terms. Future results may differ materially from management's current expectations, based upon risks and uncertainties such as expected economic trends, the ability to anticipate consumer preferences, the ability to control costs, etc. Please refer to Coach’s latest Annual Report on Form 10-K for a complete list of risk factors.

COACH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Quarters and Six Months Ended December 31, 2011 and January 1, 2011

(in thousands, except per share data)

(unaudited)

       
QUARTER ENDED SIX MONTHS ENDED
December 31, January 1, December 31, January 1,
  2011   2011   2011   2011
 
Net sales $ 1,448,649 $ 1,264,457 $ 2,499,008 $ 2,176,126
 
Cost of sales   403,438   349,281   689,144   584,779
 
Gross profit 1,045,211 915,176 1,809,864 1,591,347
 

Selling, general and administrative expenses

544,310 461,841 986,997 852,352
 
Operating income 500,901 453,335 822,867 738,995
 
Interest income, net (16) 230 98 478
 
Other expense   (1,755)   (1,124)   (3,231)   (1,934)
 
Income before provision for income taxes 499,130 452,441 819,734 737,539
 
Provision for income taxes   151,635   149,013   257,256   245,235
 
Net income $ 347,495 $ 303,428 $ 562,478 $ 492,304
 
 
Net income per share
 
Basic $ 1.20 $ 1.02 $ 1.94 $ 1.66
 
Diluted $ 1.18 $ 1.00 $ 1.90 $ 1.62
 
 

Shares used in computing net income per share

 
Basic   289,812   297,214   289,578   296,913
 
Diluted   295,509   304,655   295,572   303,106

COACH, INC.

GAAP TO NON-GAAP RECONCILIATION

For the Quarters Ended December 31, 2011 and January 1, 2011

(in thousands, except per share data)

(unaudited)

         
QUARTER ENDED
December 31, 2011

January 1, 2011

GAAP Basis Tax Charitable Non-GAAP Basis GAAP Basis
(As Reported) Adjustment Contribution (Excluding Items) (As Reported)
 

Selling, general and administrative expenses

$ 544,310 $ - $ 20,270 $ 524,040 $ 461,841
 
Operating income $ 500,901 $ - $ (20,270) $ 521,171 $ 453,335
 
Income before provision for income taxes $ 499,130 $ - $ (20,270) $ 519,400 $ 452,441
 
Provision for income taxes $ 151,635 $ (12,365) $ (7,905) $ 171,905 $ 149,013
 
Net income $ 347,495 $ 12,365 $ (12,365) $ 347,495 $ 303,428
 
Diluted Net income per share $ 1.18 $ 0.04 $ (0.04) $ 1.18 $ 1.00

COACH, INC.

GAAP TO NON-GAAP RECONCILIATION

For the Six Months Ended December 31, 2011 and January 1, 2011

(in thousands, except per share data)

(unaudited)

         
SIX MONTHS ENDED
December 31, 2011

January 1, 2011

GAAP Basis Tax Charitable Non-GAAP Basis GAAP Basis
(As Reported) Adjustment Contribution (Excluding Items) (As Reported)
 

Selling, general and administrative expenses

$ 986,997 $ - $ 20,270 $ 966,727 $ 852,352
 
Operating income $ 822,867 $ - $ (20,270) $ 843,137 $ 738,995
 
Income before provision for income taxes $ 819,734 $ - $ (20,270) $ 840,004 $ 737,539
 
Provision for income taxes $ 257,256 $ (12,365) $ (7,905) $ 277,526 $ 245,235
 
Net income $ 562,478 $ 12,365 $ (12,365) $ 562,478 $ 492,304
 
Diluted Net income per share $ 1.90 $ 0.04 $ (0.04) $ 1.90 $ 1.62

COACH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

At December 31, 2011, July 2, 2011 and January 1, 2011

(in thousands)

(unaudited)

     
December 31, July 2, January 1,
2011 2011 2011
ASSETS
 
Cash, cash equivalents and short term investments $ 1,085,595 $ 702,038 $ 939,832
Receivables 212,041 142,898 180,583
Inventories 429,031 421,831 367,410
Other current assets   169,339   185,621   134,799
 
Total current assets 1,896,006 1,452,388 1,622,624
 
Property and equipment, net 595,829 582,348 541,471
Other noncurrent assets   609,050   600,380   630,576
 
Total assets $ 3,100,885 $ 2,635,116 $ 2,794,671
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Accounts payable $ 136,731 $ 118,612 $ 103,876
Accrued liabilities 673,461 473,610 461,489
Revolving credit facilities - - 27,119
Current portion of long-term debt   804   795   790
 
Total current liabilities 810,996 593,017 593,274
 
Long-term debt 23,165 23,360 23,550
Other liabilities 397,998 406,170 439,389
 
Stockholders' equity   1,868,726   1,612,569   1,738,458
 
Total liabilities and stockholders' equity $ 3,100,885 $ 2,635,116 $ 2,794,671




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