Classic American accessories retailer Coach, Inc. (COH) Tuesday reported a higher third-quarter profit, driven by 7 percent growth in sales. Both earnings per share and revenues beat analysts' expectations. The shares are up about 12 percent in the morning trade.
For the third quarter, the company posted net income of $238.93 million or $0.84 per share, higher than $225.00 million or $0.77 per share in the previous year. On average, 30 analysts polled by Thomson Reuters expected the company to earn $0.81 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter grew 7 percent to $1.19 billion. On a constant currency basis, sales were up 10 percent from last year. Analysts estimated revenues of $1.18 billion for the quarter.
Total North American sales increased 7 percent to $792 million and International sales rose 6 percent to $382 million.
Lew Frankfort, chairman and chief executive officer of the company said, "Our results demonstrate the brand's strength across channels, categories and geographies, and reflect the traction we're achieving in Men's and digital, two key initiatives."
Gross margin expanded 35 basis points to 74.1 percent.
The company also announced that its board of directors has voted to increase its cash dividend by $0.15 annually, raising it to an annual rate of $1.35 per share starting with the dividend to be paid to stockholders in July 2013.
Coach also said Reed Krakoff, President and Executive Creative Director has informed his decision not to renew his contract, which expires in June 2014, to focus exclusively on his namesake brand. Coach is exploring strategic options for the Reed Krakoff brand, which may involve a sale to a group in which Krakoff would participate. In addition, the company has commenced a search for his successor.
As of March 30, 2013, the company had a total of 352 retail stores and 191 factory stores.
COH is currently trading at $56.38, up $5.79 or 11.45 percent, on a volume of 8.22 million shares on the NYSE.
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