Coach sales decline but Chinese market helps offset losses
Tuesday 05 August 2014
Demand for leather handbags in China has helped Coach off-set dwindling sales in its home market in the US.
The leather label founded in 1941 has been trying to halt falling sales caused by fears its logo-heavy products were too common.
It revealed net sales of $1.14bn for the final quarter of its financial year, down 7 per cent on the same period last year. But this result was better than the $1.09bn that Wall Street had expected and its shares lifted in New York.
Full year net sales fell 5 per cent to $4.81bn and net profit tumbled 24 per cent to $781m. The group instigated a new strategy in June to try to turn the brand around with the help of British designer Stuart Vevers who joined last September.
Chief executive Victor Luis said: "The fourth quarter capped a challenging year for the company, most notably in the North America women's bag and accessory business.”
North American sales fell 16 per cent in the fourth quarter but international sales jumped 7 per cent. Mr Luis explained the group was now “embarking on the execution phase” of its strategy and said its Chinese business reached sales of more than $500m. Its menswear business grew to more than $700m in the year.
Its leather and more expensive products performed well compared to falling sales of its logo-heavy bags.
Another American designer brand also reported results this week. Michael Kors reported forecast-beating results for the three months to the end of June.
Net income was 50 per cent better than the same quarter a year ago at $188m, driven by growth in Europe. But its shares fell amid concerns it was relying too much on discounting which had hurt margins.
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