Kochi Group'S Sales Recovered Significantly In The Third Quarter Of 2016

COACH, founded in New York in 1941, specializes in men's and women's boutique accessories and gifts, including handbags, wallets, accessories, fashion jewelry, shoes, clothing, watches, etc.

The recent Coach Inc. (Koch) Group recovered significantly in the third quarter of fiscal year 2016, which not only significantly increased its sales profit but also exceeded market expectations. In order to consolidate its achievements, the Group announced that it would move its senior management and reorganize its business and make layoffs.

Coach Inc. initially rose 2.4% before trading on Tuesday, and then fell 2.99%.

Gebhard Rainer, President and Chief Operating Officer of Koch Group, and David Duplantis, President of Global Marketing, Digital Marketing and Customer Experience will both leave. Andre, former president of North America Cohen will be promoted to president of North America and global marketing, while Todd Kahn, former chief executive officer, legal adviser and secretary, will increase the title of president of the group.

The Group also proposed“ Operation efficiency improvement plan ”It aims to improve organizational efficiency, update the core technology platform and optimize the supply chain network to more effectively respond to the rapidly changing global market situation, fluctuating tourism consumption flow and increasingly fierce competitive environment. This plan involving the reduction of corporate positions in the global market will generate a pre tax expense of about US $65-800 million, which is reflected in the financial statements from the fourth quarter, and is expected to be largely completed by the end of fiscal 2017. The Group did not disclose the scale of layoffs in the financial report.

Victor, CEO of Coach Group Luis pointed out in the financial report that the third quarter“ Coach brand resumed growth ”, which is specifically reflected in the core North American market. In the third quarter up to March 26, although the same store sales growth of the Kochi brand in the area was zero, it has been improved for the fourth consecutive quarter, which has stopped the decline of the past three consecutive years, and is far better than that of Consensus Metrix's comprehensive forecast for a decline of 1.4%, while the same store sales in the second quarter still fell by 22%, down 23% in the same period last year. The total sales of the brand in North America was 499 million US dollars, up 1.2% year on year and 2% at constant exchange rate. Victor Luis revealed that the performance of retail stores and specialty stores in North America has continued to improve compared with the holiday season. The brand is recovering the same store sales growth in the current four quarters as planned, and achieving a return to profitability.

At the same time, driven by the double-digit growth of sales in mainland China and Europe, international sales rose 5% year-on-year to $448 million, with a constant exchange rate increase of 7%. At a constant exchange rate, sales in China recorded a 2% growth. The strong performance of mainland China was offset by the continued weak sales in Hong Kong and Macao. Japan increased by 7%. Direct sales channels in other Asian regions recorded steady growth.

The overall net sales of Coach Group in the third quarter was $1033.1 million, including $954 million for Coach and $934 million for Stuart Weitzman, a luxury shoe brand $79 million in sales. Net sales increased by 11.2% compared with the same period last year of $929.3 million, with a constant exchange rate growth of 13%. The market expected net sales of $1.02 billion.

Net profit of $112.5 million increased by 27.7% compared with $88.1 million in the same period last year, and diluted earnings per share increased from $0.32 to $0.40. Adjusted diluted earnings per share was $0.44, better than the market forecast of $0.41, which was $0.36 in the same period last year.

After three years of downturn, Kochi brand has upgraded its stores, reduced discounts and special stores, and launched high-end series coaches In 1941, the brand finally ushered in a turning point after improving its image. The brand also began to cooperate with Snoopy and other cartoon brands to get rid of the old image of Aunt style logo bags and attract millennial consumers.

Amy, analyst of William Blair, an American securities firm In the research report released on April 7, Nobin pointed out that in fact, the survey showed that consumers were interested in Stuart, the creative director recruited from Loewe The Swagger, Mercer, Saddle and other novice bag series created by Vevers are highly accepted. The improvement of the fashion and design sense of the Coach brand has made consumers reconsider buying the brand products.

The improvement of performance and image has driven Coach to record a share price rise of more than 23% so far in 2016. Analyst Amy Nobin maintained its rating of "outperforming the market". Oliver Chen, Cowen analyst, and Adrienne, Wolfe Research analyst Yih raised the target price of Coach Inc. (NYSE: COH) before the quarterly results were announced.

　　Oliver Chen said that his team found that the momentum of Coach Coach brand was improving after investigation. The interviewees not only mentioned the wider product supply and new design of the brand, but also impressed them with the improvement of store display and sales skills. Oliver Chen and Adrienne Yih raised the target price of Coach Inc. to $46 and $47 respectively. Coach Inc. had a large fluctuation in the early part of Tuesday, rising 1.39% to $40.75 at the deadline of Vogue Chinese.

Victor, CEO of Coach Group Luis was "pleased" that the performance in the third quarter was "in line with expectations". He also pointed out that the above operational efficiency improvement plan would help Kochi brand reach the established goal of operating profit margin of 20% in fiscal 2017. The operating profit margin of Coach brand in the third quarter was only 15.1%.

The overall gross profit margin of the Group was 69.0%, a sharp drop of 260 basis points compared with 71.6% in the same period last year, while the operating profit margin fell slightly by 30 basis points to 13.0%.

　　 Koch Group The annual sales and profit expectations were maintained, among which the Kochi brand would record a low single digit sales growth, and the operating profit margin would be between 15% and 19%.