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lower-priced handbag line is starting to pay off, as sales increased slighlty in the first quarter.

But profit continued to decline, falling 3% to $140.8 million, or 44 cents a share, compared with $145.8 million, or 44 cents, last year. Still, that surpassed analysts' forecasts of a 39-cent profit.

Revenue inched up 1% to $761.4 million, as sales in North American stores jumped 8%. The company also saw strength in China, a market Coach entered last year.

The luxury brand introduced its lower-priced Poppy collection this summer. With those products, 50% of Coach's handbags are now priced under $300, compared with 30% last year.

-Reported by Jeanine Poggi in New York.

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