Upscale handbag designer Coach Inc. reported a 3.4% decline in its fiscal first-quarter profit as the company reduced shipments to U.S. department stores and increased factory outlet promotions.
It also plans to open its first flagship shop in China and open an Asian distribution center to support and tap into demand in the world's third-largest economy.
Net income fell to $140.8 million from $145.8 million, the New York-based company (COH 32.97, +0.10, +0.30%) said. The per-share amount was unchanged at 44 cents. Sales rose to $761.4 million in the quarter ended Sept. 26 from $752.5 million a year earlier. North American same-store sales fell 1%.
Analysts, on average, estimated Coach would earn 40 cents a share on sales of $754.8 million, according to FactSet.
To lure budget-conscious shoppers in this recession, Chief Executive Lew Frankfort has launched a Poppy collection, with an average handbag price of about $240, as he broadened the assortment of the company's lower-priced handbags in the $200 to $300 range. While the company doesn't discount in its full-priced stores, it's increased 20% off coupons in its factory outlets to bolster demand, analysts said. Read related MarketWatch First Take commentary.
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