Double-digit growth in China and sales gains in Southeast Asia saw luxury brand Coach boost its net income almost sevenfold over its final quarter.
The group’s net income for the quarter totalled US$82 million, compared to $12 million in the same period last year. Net sales were up 15 per cent to $1.15 billion.
Sales for the Coach brand also rose 15 per cent globally, to $450 million from $392 million.
Greater China sales increased 5 per cent in dollar value, offset by continued weakness in Hong Kong and Macau.
In Japan, sales rose 7 per cent, anticipated following an upswing in tourist numbers from China.
Gross profit for the Coach brand totalled $737 million, up 10 per cent.
During the quarter, the group acquired the Stuart Weitzman footwear brand. Coach CEO Victor Luis says the overall contribution of the new brand “outpaced our original projections”.
He says the group looks forward to driving additional synergies across the brands – notably in real estate, supply chain and category expansion – while taking “an increasing share of the attractive and growing global footwear category”.
Net sales for Stuart Weitzman totalled $84 million for the fourth quarter, with gross profit totalling about $46 million.
During the quarter, the company had special charges under previously announced actions…
Transformation plan: charges of about $8 million, primarily being lease termination charges and organisational efficiency costs.
Operational efficiency plan: charges of about $44 million, primarily organisational efficiency costs.
Acquisition-related costs: Charges of about $6 million associated with the acquisition of Stuart Weitzman.
These actions helped negatively impact net income by $45 million after tax.
For its latest fiscal year, the group’s net sales totalled $4.49 billion – up 7 per cent on a reported basis and 9 per cent in constant currency from the previous year.
Gross profit edged up 5 per cent to $3.05 billion.
For the Coach brand, net sales for the year reached $4.15 billion, up 2 per cent.
Gross profit, at $2.85 billion, eased about 1 per cent.
For Stuart Weitzman, net sales were $345 million with gross profit totalling $202 million.
Meanwhile, the group expects revenues for fiscal 2017 to increase by low-to-mid single digits, with double-digit growth for net income.
The company expects to report first-quarter financial results on November 1.
Established in New York in 1941, Coach is sold worldwide through its own stores, select department stores and specialty stores, as well as its website.