Coach Group 2016 Third Quarter Sales Significant Recovery

COACH (Kou Chi), founded in 1941 in New York, is the main male and female fine accessories and gifts, including handbags, wallets, accessories, fashion jewelry, footwear, clothing, watches and so on.

The recent Coach Inc. (Coach) group recovered significantly in the three quarter of fiscal year 2016. Not only did the sales increase substantially, but also the market expectations were made, and the consolidation of the results group announced a high-level mobilization and restructuring of the business to lay off staff.

Coach Inc. initially increased by 2.4% on Tuesday, and then fell 2.99%.

Coach group president and chief operating officer Gebhard Rainer and global marketing, digital marketing and customer experience President David Duplantis will leave.

Former North American president Andre Cohen will be promoted to North America and global marketing president, and the former chief executive, legal adviser and Secretary Todd Kahn will increase the title of group president.

The group also proposed "

"It aims to enhance organizational efficiency, update core technology platforms and optimize supply chain networks to better cope with the rapidly changing global market situation, fluctuating tourism consumption and increasingly fierce competition environment.

The plan to reduce corporate jobs in the global market will generate about $6500-8000 in pre tax expenses, which will begin to react in the financial statements from the fourth quarter and are expected to be completed in the end of 2017.

In the earnings report, the group did not disclose the size of the layoffs.

Victor Luis, chief executive of Coach group, pointed out in the earnings report that the three quarter "

This is embodied in the core North American market.

In the three quarter of March 26th, although Coach brand sales in the same store grew to zero, it has been improved for fourth consecutive quarters, ending the three consecutive year's downtrend, which is far more than Consensus Metrix's overall expected decline of 1.4%, while in the two quarter, the same store sales fell 22%, compared with a 23% decline in the same period last year.

Brand sales in North America amounted to $499 million, an annual increase of 1.2% and a constant exchange rate increase of 2%.

Victor Luis revealed that the performance of retail stores and special stores in North America continued to improve compared with the holiday season. The brand is resuming its same store sales growth in the current fourth quarter as planned, and has rebounded in profits.

At the same time, driven by double-digit growth in sales in mainland China and Europe, international sales rose 5% to $448 million compared to the same period last year, while the constant exchange rate rose by 7%.

China's regional sales grew at a constant rate of 2%, while the strong performance in mainland China was offset by the continued weak sales in Hong Kong and Macao, while Japan increased by 7%.

In the three quarter, Coach group's overall net sales amounted to $1 billion 33 million 100 thousand, among which Coach Coach brand was 954 million dollars and shoe luxury brand Stuart Weitzman 7900 million.

Net sales increased by 11.2% compared with $929 million 300 thousand a year ago, while the constant exchange rate increased by 13%, and the net sales expected by the market were US $1 billion 20 million.

Net profit of 112 million 500 thousand US dollars was 27.7% higher than that of 88 million 100 thousand US dollars in the same period last year, and the diluted earnings per share rose from US $0.32 to US $0.40.

The adjusted diluted earnings per share were $0.44, better than the market forecast of $0.41, compared with $0.36 a year ago.

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After three years of slow down, the Coach brand has finally come to a turning point after upgrading its stores, reducing discounts and special outlets, and launching the high-end Coach 1941. The brand has begun to cooperate with Snoopy and other cartoon brands, hoping to wash away the old image of the aunt's Logo bag to attract the millennial consumers.

In a research report released in April 7th by William Blair analyst Amy of the US brokerage firm, it was pointed out that the survey showed that consumers had a high degree of acceptance of the new bag series such as Swagger, Mercer and Saddle created by Stuart Vevers, a creative director from Loewe Rowe, and the improvement of Coach's brand fashion and sense of design allowed consumers to reconsider buying the brand product.

The improvement of performance and image driven Coach has entered an increase of more than 23% in 2016.

Analyst Amy Nobin maintains the rating of "win win market" for the stock.

Cowen analyst Oliver Chen and Wolfe Research analyst Adrienne Yih have raised the target price of Coach Inc. (NYSE:COH) before the quarterly results announcement.

Oliver Chen said its team has found that the momentum of Coach Coach brand is improving.

Respondents not only mentioned the brand's wider product supply and new design, but also impressed their display and sales skills.

Oliver Chen and Adrienne Yih each raised the target price of Coach Inc. to $46 and $47 respectively.

Coach Inc. had a large early wave on Tuesday, rising 1.39% to 40.75 dollars when it was no fashion Chinese net.

Victor Luis, chief executive of Coach group, was pleased with the "expected" performance in the three quarter. He also pointed out that the operational efficiency improvement plan helped Coach brand achieve its target of 20% in the 2017 fiscal year.

In the three quarter, Coach's brand operating profit margin was only 15.1%.

The gross profit margin of the group was 69%, down 260 basis points from 71.6% in the same period last year, and the operating profit margin dropped slightly by 30 basis points to 13%.

Sales and profit expectations were maintained throughout the year. Coach brand recorded a low single digit sales growth, with a profit margin of 15%-19%.