(Coach article updated with growth strategy.)
NEW YORK (
) -- Despite
beating profit expectations and posting its first same-store sales gain in over a year, Wall Street is focusing on the negative.
Shares of the luxury handbag and accessory maker are falling about 6% to $35.25 in morning trading, as the company failed to meet same-store sales estimates and avoided issuing detailed guidance.
During the quarter, Coach earned $241 million, or 75 cents a share, compared with $216.9 million, or 67 cents, in the year-ago period. Analysts expected Coach to earn 72 cents a share.
Sales rose 11% to $1.07 billion from $960.3 million last year, while North American same-store sales increased 3.2%. This is the first comparable sales gain since September 2008. Still, analysts predicted a 5.1% jump.
This number comes as a disappointment after high-end jeweler
announced last week that its holiday sales came in better than expected, and upped guidance as a result.
There was substantial good news to Coach's release, however. Gross margin, for one, grew to 72.4% from 72.1%. The company also repurchased shares during the quarter and continues to open new stores.
Coach plans to maintain mid- to high-single-digit percentage square footage growth in North America and Japan in 2010, but expects to ramp up square-footage growth in China by 50% during the year.
For these reasons, Wall Street Strategies analyst Brian Sozzi says the stock is currently an "attractive valuation."
-- Reported by Jeanine Poggi in New York.
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