Retail in Asia


Coach gives tepid forecast amid turbulent retail environment

Coach Singapore - Retail in Asia

Luxury handbag maker Coach Inc. forecast earnings and sales for the current year that were roughly in line with analysts’ expectations, showing that the company’s turnaround efforts are being challenged by a difficult retail environment.

Revenue for fiscal 2017 will increase at a low-to-mid-single-digit percentage rate, and earnings per share will grow at a double-digit pace, the New York-based company said in a statement Tuesday. Analysts estimated a 4 percent revenue gain and a 15 percent increase in adjusted earnings.

SEE ALSO: Coach brings ‘modern luxury’ retail concept to Asia

The outlook signals that Coach is confident in the progress that it’s making in reviving the cachet of its brand, with increased sales at full price at its own stores. Yet the company has more work to do in improving its outlet business, and ailing traffic at department stores resulted in heavy discounting. Consumers also have restrained their spending on non-essential items amid recent economic turbulence.

Coach has been introducing new items, such as a line of Mickey Mouse handbags and other limited-edition offerings, to entice shoppers to pay full price. The moves helped comparable sales in North America rise 2 percent, beating the 1.8 percent increase that analysts expected, according to the average of estimates compiled by Consensus Metrix. Total North American Coach brand sales increased about 9 percent to $606 million.

To keep margins improving, Coach said on Tuesday that it plans to close 25 percent of the department store distribution, or 250 locations, because of the higher markdowns that have hurt its brand image.

(Source: Bloomberg)