COACH reported on Tuesday that net sales rose 7% to $1.27 billion in its second fiscal quarter ended Dec. 26, buoyed by growth in China and its men’s lines.
More importantly, there were signs that Coach’s years-long sales hemorrhage in North America, still its biggest market, is about to end: comparable sales fell 4%, the eleventh straight quarter of declines, but the smallest drop in more than two years. Coach executives say they still expect the company to return to growth in its home market by the end of the fiscal year. The news sent shares up as much as 12% as Coach investors sensed light at the end of the tunnel.
Since CEO Victor Luis came to the helm nearly three years ago, Coach has endured the awful withdrawal symptoms from cutting off its discount-addicted shoppers. (By some estimates, sales at the outlet stores are 70% of company sales, though the company never breaks out the number.) That led to several quarters of 20+% drops in North American comparable sales.