--> no pre-market for now
Coach beats by $0.01, reports revs in-line with N Am comps -9.5%; reaffirms 2016 outlook
- Reports Q1 (Sep) earnings of $0.41 per share, $0.01 better than the Capital IQ Consensus of $0.40; revenues fell 0.8% year/year to $1.03 bln vs the $1.04 bln Capital IQ Consensus.Q3 gross margin was 67.7% versus 69.3% year ago.
- N Am comparable store sales were down 9.5% including the impact of the Internet, which pressured total comparable stores sales by about 1.5 percentage points due to the reduction in eOutlet events. As expected, at POS, sales in North American department stores declined at a mid-teens rate versus prior year, while net sales into department stores declined to a lesser degree.
- Fiscal Year 2016 Outlook Maintained: Coach brand revenues for Fiscal 2016 +LSD in constant currency on a 52-week basis. Based on current exchange rates, foreign currency will have an ~ 200 basis point negative impact on overall Fiscal 2016 revenue growth distorted to the first half. Gross margin ~70% on a constant currency basis, while negative foreign currency effects may impact gross margin by 80-100 basis points. SG&A expenses for the brand are anticipated to rise at a mid-single-digit rate in constant currency, driven primarily by a shift in project timing from FY15, while dollar growth is expected to be somewhat lower. Therefore, taken together Coach brand operating margin estimated to be in the mid-to-high teens. This guidance excludes expected transformation-related charges of around $50 mln, as well as Stuart Weitzman acquisition and integration related charges of around $30 mln (which primarily includes the impact of limited life purchase accounting and contingent payments) over the course of 2016. In addition, the company is forecasting Stuart Weitzman brand sales in the area of $335 mln on a reported dollar basis for fiscal 2016, driving Coach, Inc. total revenue growth to high-single digits (vs +6.7% to $4.47 bln estimate) and adding about $0.09 to earnings per diluted share, excluding items. Fiscal 2016 will include a 53rd week in its fiscal fourth quarter, which is expected to contribute ~$75-$80 mln in incremental revenue and $0.06 in earnings per diluted share to Coach, Inc.