Coach Maintains 2016 Guidance; Outlines Operational Efficiency Initiatives

(RTTNews) - Coach, Inc. (COH) announced the company is maintaining fiscal 2016 constant currency revenue growth and margin guidance. Coach brand revenues for the year are still expected to increase by low-single digits in constant currency on a 52-week basis. Coach brand operating margin for fiscal 2016 is still estimated to be in the mid-to-high teens with gross margin for the Coach brand projected to be in the range of last year's margin of about 691/2% on a constant currency basis. The company maintained its operating income outlook for fiscal 2016.

Victor Luis, CEO of Coach, Inc., said, "We are on track to return to positive comps in North America in the fourth quarter and to achieve an inflection in our profitability."

Coach also announced a series of operational efficiency initiatives focused on creating an agile and scalable business model. In aggregate, the company expects to incur pre-tax charges associated with these actions of approximately $65-$80 million, which will be reflected beginning in the fourth quarter of fiscal 2016, and will be substantially complete by the end of fiscal 2017. The charges are associated with organizational efficiency, primarily related to the reduction of corporate staffing levels globally.

For the third-quarter of 2016, net income on a non-GAAP basis totaled $124 million, with earnings per share of $0.44. On a GAAP basis, net income for the quarter was $112 million with earnings per share of $0.40 compared to prior year GAAP net income of $88 million or $0.32 earnings per share.

For the third-quarter, net sales totaled $1.03 billion, compared with $929 million reported in the same period of the prior year, an increase of 11%. On a constant currency basis, total sales increased 13% for the period.

"Our international businesses posted strong growth on a constant currency basis, highlighted by double-digit increases in Mainland China and Europe, as well as sales gains in Japan and Other Asia," Victor Luis, CEO, stated.