Handbag maker Coach's profit beats as North America demand improves

Coach Inc posted a better-than-expected profit for the second quarter as demand for its Poppy handbags improved in North America, its biggest market, from the first quarter and sales rose in China, a key market.

The company's shares rose 4.5 percent in premarket trading.
Coach has been shifting focus to markets such as Asia and Europe as it loses customers in North America to fast-growing rivals Michael Kors Holdings Ltd and Kate Spade & Co.

Coach said this month that it would buy women's luxury footwear company Stuart Weitzman Holdings LLC, as it looks to better compete in the affordable luxury market.

Coach, founded in 1941 in a Manhattan loft, has been offering discounts on its handbags, shoes and apparel to attract shoppers in North America.

Sales in China rose 13 percent and overall international sales increased 5 percent on a constant currency basis in the quarter ended Dec. 27. China accounted for about a tenth of Coach's total sales in the year ended June 28.

Holiday-quarter sales in North America rose about 24 percent from the first quarter to $785 million.

The company's net income fell to $183.5 million, or 66 cents per share, from $297.4 million, or $1.06 per share, a year earlier.

Excluding items, Coach earned 72 cents per share.

Net sales fell 14 percent to $1.22 billion.

Analysts had expected a profit of 66 cents per share and revenue of $1.23 billion, according to Thomson Reuters I/B/E/S.

Coach's shares were trading at $38.10 before the bell.

$1 = £0.66