Coach Inc.’s fiscal second-quarter earnings rose 15% as strong North American sales helped offset flat indirect sales.
The luxury handbag, accessories and leather-goods maker has seen its profit grow for over two years on the strength of its North American direct-to-consumer businesses and global expansion. Coach COH +5.71% also is broadening its men’s business with more male-oriented products and by opening men’s stores in the U.S. and Japan. But customers’ growing concerns about the economy may temper Coach’s momentum.
Shares of Coach rose 2.9% to $66.10 before Tuesday’s opening bell. The stock has risen 2.5% over the past three months.
For the quarter ended Dec. 31, Coach reported a profit of $347.5 million, or $1.18 a share, up from $303.4 million, or $1 a share, a year earlier. Sales jumped 15% to $1.45 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of $1.15 a share on revenue of $1.43 billion.
Gross margin slipped to 72.2% from 72.4%.
Direct-to-consumer sales, which now include its Singapore business, increased 17%. Same-store sales rose 8.8% in North America and were flat in Japan, on a constant-currency basis. China, which the company has called its largest geographic growth opportunity, saw double-digit same-store sales growth.
Indirect sales were flat at $166 million, hurt by the timing of international shipments.