Luxury handbag and accessories retailer

Coach

(COH)

Monday raised its second-half 2004 guidance, setting up third-quarter and fourth-quarter earnings to come in ahead of the Wall Street consensus.

The company expects to earn 52 cents a share in the second half of 2004, compared with analysts' consensus for 49 cents a share. Previously, the company had guided for 48 cents a share. It earned 33 cents a share earned in the year-earlier period. Sales are seen at $615 million or higher.

The New York-based company said U.S. same-store sales are trending ahead of expectations led by retail stores and double-digit increases in same-location sales in Japan in the current third quarter.

As a result, Coach expects a profit of 26 cents a share on sales of $300 million in the third quarter. The consensus estimate is 25 cents a share on sales of $293.72 million. Third-quarter earnings results will be released on April 20.

Merrill Lynch analyst Mark Friedman said the third-quarter forecast indicates that "spring is off to a great start." He cited strong sales of the company's Valentine's Day items and of its Soho and Hamptons Weekend collections.

Friedman expects third-quarter same-store sales to increase 12%. The company had a 14.1% increase in same-store sales in third-quarter 2003. (Merrill Lynch does investment banking for Coach.)

Fourth-quarter earnings are seen at 26 cents a share on sales of $315 million. Analysts polled by Thomson One Analytics expect earnings of 24 cents a share on sales of $307.48 million.

SG Cowen analyst Elizabeth Montgomery increased her profit forecast for the third quarter to 26 cents from 25 cents a share. The analyst also upped fourth-quarter estimates to 26 cents from 24 cents a share.

"Coach's strong third-quarter 2004 results, despite tough comparisons and management's high degree of visibility into forward revenue and earnings, highlight the competitive advantages of the company's business model, including an accessible luxury positioning, extensive use of merchandise pre-testing programs and short lead-times," the analyst wrote in a research note. (SG Cowen has an investment banking relationship with Coach.)

Despite the guidance, Coach's shares were recently falling 68 cents, or 1.7%, to $38.68, much as they did when the company

reported a huge jump in second-quarter earnings on Jan. 21, which beat analysts' consensus estimates.