Coach, Inc. (COH) has reported a 21.78 percent rise in profit for the quarter ended Oct. 01, 2016. The company has earned $117.40 million, or $0.42 a share in the quarter, compared with $96.40 million, or $0.35 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $126 million, or $0.45 a share compared with $113.10 million or $0.41 a share, a year ago.
Revenue during the quarter went up marginally by 0.71 percent to $1,037.60 million from $1,030.30 million in the previous year period. Gross margin for the quarter expanded 128 basis points over the previous year period to 68.88 percent. Total expenses were 84.01 percent of quarterly revenues, down from 86.28 percent for the same period last year. This has led to an improvement of 226 basis points in operating margin to 15.99 percent.
Operating income for the quarter was $165.90 million, compared with $141.40 million in the previous year period.
However, the adjusted operating income for the quarter stood at $176.80 million compared to $165 million in the prior year period. At the same time, adjusted operating margin improved 102 basis points in the quarter to 17.04 percent from 16.01 percent in the last year period.
Victor Luis, chief executive officer of Coach, Inc., said, "We are pleased with our performance in the quarter, highlighted by continued positive comparable store sales in North America and growth internationally. We remained focused on elevating the perception of the Coach brand through compelling product, differentiated store environments and emotional marketing. At the same time, we implemented the strategic actions necessary to reposition the brand and streamline our distribution in the promotional North American department store channel. Despite this deliberate pullback, we achieved growth across key financials, including sales, gross profit and operating income, as well as double-digit earnings growth."
For financial year 2017, Coach, Inc. forecasts operating income to grow in the range of 18.50 percent to 19 percent.
Working capital increases
Coach, Inc. has recorded an increase in the working capital over the last year. It stood at $1,808 million as at Oct. 01, 2016, up 12.96 percent or $207.40 million from $1,600.60 million on Sep. 26, 2015. Current ratio was at 3.59 as on Oct. 01, 2016, up from 3.13 on Sep. 26, 2015.
Cash conversion cycle (CCC) has decreased to 42 days for the quarter from 105 days for the last year period. Days sales outstanding were almost stable at 20 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 77 days for the quarter compared with 144 days for the previous year period. At the same time, days payable outstanding went down to 56 days for the quarter from 60 for the same period last year.
Debt comes down significantly
Coach, Inc. has recorded a decline in total debt over the last one year. It stood at $591.40 million as on Oct. 01, 2016, down 33.60 percent or $299.20 million from $890.60 million on Sep. 26, 2015. Total debt was 12.90 percent of total assets as on Oct. 01, 2016, compared with 19.55 percent on Sep. 26, 2015. Debt to equity ratio was at 0.22 as on Oct. 01, 2016, down from 0.36 as on Sep. 26, 2015.
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