For its second fiscal quarter ended December 27, 2014, sales drove down 14 per cent from a year earlier quarter at Coach Inc, a New York design house of modern luxury accessories and lifestyle collections.
Coach said it reported sales for the second quarter of fiscal 2015 at $1.22 billion compared with $1.42 billion in the same period of the prior year, down 14 per cent.
Reported net income plunged to $183 million or earnings per diluted share of $0.66 from net income of $297 million or earnings per diluted share of $1.06 in the prior year’s second quarter.
For the second quarter of fiscal 2015, on a non-GAAP basis, operating income totaled $299 million as against $436 million reported in the year-ago period.
While operating margin in the same period stood at 24.5 per cent versus 30.7 per cent, reported for the prior year.
During the reporting quarter, on a non-GAAP basis, gross profit slid down to $841 million from $983 million a year ago, and gross margin was 69.0 per cent vis-à-vis 69.2 per cent in the year ago quarter.
SG&A expenses as a percentage of net sales totaled 44.4 per cent on a non-GAAP basis, as compared to 38.5 per cent posted in the same quarter from fiscal 2014.
During the second quarter of fiscal 2015, the company recorded charges of $20 million under its multi-year transformation plan.
These charges consisted primarily of accelerated depreciation for renovations, lease termination costs related to store closures and organizational efficiency costs.
These actions increased the company’s SG&A expenses by $19 million and cost of sales by $1 million, negatively impacting net income by $14 million after tax or $0.05 per diluted share in the second fiscal quarter.
In addition, the company recorded costs of $4 million associated with the pending acquisition of Stuart Weitzman which impacted net income by $2 million after tax or $0.01 per diluted share.
CEO Victor Luis said, “We are encouraged by the green shoots we are seeing in our business, as our brand transformation begins to take hold across the three brand pillars of product, stores and marketing.”
“We continue to be focused on the execution of our strategy with the launch of Stuart Vevers’s spring collection across all channels and ongoing implementation of our fleet optimisation plan,” he added.
He continued, “As we look over our planning horizon, we remain confident in our roadmap to reinvigorate long-term sustainable growth and realize our vision for global modern luxury.”
