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Coach Earnings Double

The leather goods retailer also raises guidance, but the stock falls.

Luxury leather goods retailer



posted a big increase in fourth-quarter earnings Tuesday on a 46% jump in total revenue.

The company also guided first-quarter and full-year results ahead of consensus estimates. Nevertheless, shares were recently falling 83 cents, or 2%, to $42.21.

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New York-based Coach earned $66 million, or 34 cents a share, compared to $30 million, or 16 cents a share, in the year-ago period. Analysts were calling for a profit of 31 cents a share.

Total sales jumped to $338.1 million in the quarter ended July 3, from $231.5 million. Direct-to-consumer sales were up 39% to $195 million, while same-store sales in that unit jumped 17.7%.

"We were excited to see an unprecedented high level of growth in the U.S. accessory category, as evidenced by sales increases in department and specialty stores," the company said in a statement. "This trend bodes well for a sustainable higher level of consumer spending on handbags and women's accessories."

Gross margins swelled 350 basis points to 76.7% as a percent of sales, unusual for the retail sector, where gross margins are normally in the 40% range. Coach cited channel mix, sourcing cost initiatives and product mix.

Coach forecast earnings of 30 cents a share on sales of $330 million in the first quarter. Analysts are calling for a profit of 29 cents a share. That would compare to 22 cents a share in the year-earlier period.

In fiscal 2005, the company expects to earn $1.68 a share on sales of $1.6 billion, ahead of analysts' estimates for $1.64 a share. The company earned $1.36 a share in fiscal 2004.