Coach turnaround drags on performance while share price drops on projections

Alys Key
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Coach Women's Spring 2016 Show - Runway
Coach is heading towards 2018 revenue slightly lower than expected (Source: Getty)

Handbag maker Coach has reported sliding sales as it executes a turnaround plan with the aim of regaining its aura of exclusivity.

Net sales fell from $4.49m to $4.48m (£3.48m), mostly due to Coach’s process of pulling out of various sales channels.

Like other luxury brands, Coach has removed its products from some department stores, which regularly sell at discount prices, in order to maintain the brand’s exclusivity.

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On a comparable store sales basis, revenue in North America was up for the fifth quarter in a row. Net income rose to $151m from $81.5m.

But guidance on full-year sales disappointed the markets, leading to a drop in Coach’s share price of more than six per cent today.

The company anticipates revenue of up to $5.9bn for 2018, below market consensus of $6bn.

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Coach’s $2.4bn acquisition of another handbag brand Kate Spade closed in July, following the trend for consolidation in the luxury fashion sector.

Chief executive Victor Luis said: “Kate Spade brings a new, unique brand attitude and an additional consumer segment to the Coach, Inc. portfolio and we expect that this acquisition will enhance our position in the attractive and growing $80bn global premium handbag and accessories, footwear and outerwear market.”

Read more: Coach buys Kate Spade for $2.4bn (£1.85bn)

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