Coach F3Q13 Earninvs Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“North American sales increased 7% to $792 million from $738 million last year, with direct sales up 8% on a 1% comparable store sales gain. And, fourth, international sales increased 6% to $382 million from $359 million last year, driven in part by a 40% gain in sales in China, with a continuation of double digit comps. On a constant currency basis, international sales were up 14%.”

“352 retail stores and 191 factory stores in North America at the end of the period”

“China, during the quarter we opened one new location on the mainland, bringing the total number to 118 locations”

“we now directly operate 93 locations in Asia comprised of 49 in Korea, including one location we opened in the quarter, 27 in Taiwan, 10 in Malaysia, and 7 in Singapore”

“Japan, we closed two locations, taking the total to 191”

“The gross margin rate was 74.1%, up 35 basis points from last year.”

“there’s an interesting inflection happening in [North America] full price today, where we have a significant amount of leasing activity happening around leases that are coming due, which provides us an opportunity for repositioning, looking at market penetration, and potential downsizing of stores in select markets. In addition, we have significant lease rights built in, which allow us to take action, and on a select basis, underperforming stores.”

“On the factory side, frankly there’s a lot of development happening. There’s an enormous amount of new development and there we’re focused on select new market entries and new store entry, as well as maximizing the men’s opportunity with some repositioning in smaller stores.”

“on Japan, quite a similar story in the sense that there is very little development taking place in full price. Indeed, most of luxury full price distribution is through the department store channel, which is not growing, and has in fact been contracting for over a decade. Our focus there is on men’s distribution.”

“The [Men’s] business, we believe, in the medium term, is a billion dollar global opportunity. And the shifts that we’re seeing globally is the growth in the bag business.”

“Our strategy is obviously very different than the traditional European luxury brands who are much more focused on exclusivity. Coach is much more focused on being a selective brand”