TPR Tapestry Inc

By Suzanne Kapner 

Coach Inc.'s namesake brand returned to growth in North America, the first quarterly sales increase in the handbag maker's home market in nearly three years.

Sales of the core Coach brand rose 1% to $499 million in North America and rose 5% to $448 million overseas, a sign the company's turnaround efforts are starting to take hold. Sales had fallen sharply after overexpansion and heavy discounting damaged the brand.

Coach Chief Executive Victor Luis said the company's efforts to add new, more stylish designs, upgrade stores and scale back promotions were finally paying off. He said the company's average unit retail, a measure of what customers are willing to pay, was above $300 per handbag for the first time since fiscal year 2009.

"The Coach brand is very much on its way to evolving from its specialty retailer and accessories brand to a true house of fashion design," Mr. Luis said on a conference call.

On Tuesday, the company said it would eliminate about 300 jobs, or 10% of its corporate workers, and shuffle its management. Two executives will leave the company, including Gebhard Rainer, president and chief operating officer.

As part of the executive shuffle, Andre Cohen was promoted to president of North America and global marketing, while Todd Kahn was promoted to president, chief administrative officer and secretary.

Coach said it would take a charge of $65 million to $80 million in the current quarter stemming from the layoffs and other moves.

Coach shares rose 1.9% in midmorning trading, changing hands at $40.94. The stock is up more than 40% since the end of September.

In all, the company reported a profit of $112.5 million, up from $88.1 million, a year earlier. Quarterly revenue increased 11% to $1.03 billion for the three months to March 26. Stuart Weitzman, which Coach acquired last year, had sales of $79 million in the period.

But the company isn't entirely out of the woods. Sales at Coach's retail stores excluding newly opened or closed locations in North America were unchanged from a year ago, while e-commerce sales rose just 1% and sales at department stores fell by around 5%.

Mr. Luis said he expects comparable sales at the retail locations to turn positive in the current period, when about half of the company's stores will have been remodeled.

Coach's international sales rose 5% on strength in China and Europe, despite a negative impact from the strong dollar. The company said total China sales rose 2% on a constant currency basis, as strength in the mainland offset weakness in Hong Kong and Macau.

Lisa Beilfuss contributed to this article.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com

(END) Dow Jones Newswires

April 26, 2016 12:07 ET (16:07 GMT)

Tapestry (NYSE:TPR)
Historical Stock Chart
From Mar 2024 to Apr 2024

Tapestry (NYSE:TPR)
Historical Stock Chart
From Apr 2023 to Apr 2024