American luxury accessories company Coach Inc reported an increase in first quarter earnings and profit margins thanks to strong sales of handbags. Net income for the quarter leapt 48 percent to $100 million (£56 million) from $68 million in the same period last year. Meanwhile net sales rose 30 percent to $449 million from $344 million the year before, exceeding analysts’ expectations. Direct sales increased 29 percent to $315 million, while same-store sales in the US climbed 25.1 percent and retail sales rose 14.4 percent. Factory sales for the quarter rose 35.8 percent.
Indirect sales, which do not include Coach Japan ‘s sales, rose 34 percent to $134 million. Strong US department store sales and international wholesale sales were the main contributors to the good results.
“Our exceptional results again this quarter speak to the vibrancy of the Coach proposition. This consistency demonstrates the strength of the Coach brand, the sustainability of our business model, the clarity of our strategies and our ability to execute efficiently. Coach is clearly well positioned for another excellent holiday season,” said chairman and chief executive, Lew Frankfort. “Our first quarter results were fueled by innovative transitional and new fall product. Each of our monthly introductions was very well received,” he continued.
Coach’s projections for the second quarter include a sales increase of 21 percent to at least $645 million. The company expects sales for the financial year 2006 to rise 23 percent to $2.1 billion. The company plans to open four more stores in the US in the second quarter, bringing the total to 10 new US stores and expansions of six existing stores. Coach Japan will open two new stores in the second quarter.
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