NEW YORK--(BUSINESS WIRE)--April 23, 2001--Coach, Inc. (NYSE: COH), a leading marketer of modern classic American accessories, today announced a 156% increase in net income for its third fiscal quarter ended March 31, 2001. This substantial increase in net income from the prior year's third quarter reflected 13% growth in net sales combined with significant operating margin improvement.

For the nine months ended March 31, 2001, net sales rose 12% and net income increased 73% versus the comparable year-ago period, before the impact of a reorganization charge. This charge was taken in the first quarter and related to the closing of a manufacturing facility in Florida. Including these costs, net income rose 64%.

In the third quarter, net sales were $130.6 million, 13% higher than reported in the same period of the prior year. Net income rose 163% to $8.0 million, including the impact of a $0.2 million, net after-tax, positive adjustment related to the reorganization charge taken in the first fiscal quarter. Net income before the impact of this adjustment rose 156% to $7.8 million, or $0.17 per fully diluted share, compared with $3.0 million, or $0.07 per share, the prior year based upon the current number of shares outstanding. Actual shares outstanding prior to the initial public offering were 35.0 million and earnings per share in the prior-year equaled $0.09 using this number of shares.

Gross margin in the quarter increased by 430 basis points from 61.0% to 65.3%. This improvement was driven by a shift in product mix, reflecting the continued diversification into non-leather fabrications with new and successful mixed-materials collections. In addition, gross margin benefited from the continuing impact of sourcing cost reductions. SG&A expenses as a percentage of net sales declined to 55.9%, a 130 basis point improvement from the 57.2% reported in the year-ago quarter due to operating leverage as the sales base expanded.

For the first nine months of fiscal year 2001, ended March 31, 2001, net sales were $479.3 million, up 12% from the $427.2 million reported in the first nine months of fiscal 2000. Net income rose to $57.8 million before the impact of the reorganization charge, up 73% from the $33.3 million reported a year ago. Including the impact of this charge, net income was $54.8 million, up 64% from prior-year levels.

Third fiscal quarter sales grew in each of Coach's primary channels of distribution as follows:

• Direct to consumer sales, which consist primarily of sales at Coach stores, rose 16% to $77.0 million during the third quarter from $66.4 million in the comparable period of the prior year. These results were generated by new and expanded stores as well as comparable store sales, which rose 3.7%, with retail stores up 2.7%, and factory stores up 4.6%.

• Wholesale sales increased 10% to $53.6 million in the third quarter from $48.7 million in the comparable period of the prior year. Results were driven by strong gains in the international division, highlighted by continued double-digit increases in comparable location sales to Japanese consumers worldwide.

During the third quarter of fiscal 2001, the company opened one Coach factory store, bringing the total to 114 retail stores and 66 factory stores at March 31, 2001. In addition, four retail stores were renovated and one store was relocated. The company remains on target to open an additional 7 Coach retail stores in the fourth quarter, bringing the total number of retail stores opened in fiscal 2001 to 15. At the end of the third fiscal quarter, through new store openings and renovations, 65 stores, representing over 70% of retail sales volume, reflected the new retail format.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc., said, "Our strong third quarter results demonstrate the continued enthusiasm Coach consumers have shown toward our modern American styling and use of new materials. During the period, we successfully introduced new styles and colors in our Hamptons and Mercer twill collections, both in their second year. In addition, we launched an important new Signature lifestyle collection, in fabric and leather, with a graphic logo design inspired by materials from our archives."

Mr. Frankfort added, "The Signature collection, which was immediately well received, is particularly significant as it advances the Coach brand, attracting loyal users and bringing new consumers into the Coach franchise. This occurred both in the U.S. and, most notably, in Japan where Coach's market share continues to grow. Building on this success, Signature, which now consists of handbags, women's accessories and shoes, will be extended into new materials and additional categories in seasons to come."

"Looking ahead, we're optimistic about the prospects for the fourth fiscal quarter. Mother's Day, Father's Day and graduation each represent strong sales occasions for Coach. While a significant portion of our consumers' purchases today are for gifts, we are further strengthening Coach's position as a gift resource with new product, a stronger focal presentation for key seasonal items and a more shoppable environment. We are well positioned to achieve strong results for the remainder of this fiscal year and into fiscal 2002," Mr. Frankfort concluded.

Coach, with headquarters in New York, is a leading American marketer of fine accessories and gifts for women and men, including handbags, business cases, furniture, luggage and travel accessories, wallets, footwear, watches and related accessories. Coach is sold worldwide through Coach stores, select department stores and specialty stores, through the Coach catalogue in the U.S. by calling 800-262-2411 and through Coach's website at www.Coach.com.

Coach's shares are traded on The New York Stock Exchange under the symbol COH.

Coach will host a conference call to review these results at 8:30 a.m. (EST) on April 24, 2001. Interested parties may listen to the Webcast by accessing www.coach.com/investors or www.vcall.com on the Internet or dialing in to 1-888-455-0040 and asking for the Coach earnings call led by Andrea Shaw Resnick. A telephone replay will be available starting at 12:00 noon on April 24, 2001, for a period of five business days. The number to call is 1-800-810-4034. A webcast replay of this call will be available for five business days on the Coach website.

Information on Coach products can be found on the Web at: http://www.coach.com.

This press release contains forward-looking statements, based on current expectations, that involve risks and uncertainties that could cause results of Coach, Inc. to differ materially from management's current expectations. These forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "intend," "estimate," "are positioned to," "continue," or the negative thereof or comparable terminology, including predictions of future results. Future results will vary from historical results and historical growth is not indicative of future trends, which will depend upon expected economic trends, our ability to anticipate consumer preferences for accessories and fashion trends, our ability to control costs, our store expansion and renovation program, and are subject to risks, including currency fluctuations, and other factors. Please refer to the company's most recent Prospectus for a complete list of risk factors.

                              COACH, INC.
       CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
             For the Thirteen and Thirty-Nine Weeks Ended
                   March 31, 2001 and April 1, 2000
                 (in thousands, except per share data)
                              (unaudited)

                         THIRTEEN WEEKS ENDED  THIRTY-NINE WEEKS ENDED
                            March 31,  April 1,   March 31,  April 1,
                            2001       2000       2001       2000

Net sales                    $130,598 $115,072   $479,308   $427,232

Cost of sales                  45,272   44,835    168,982    173,203

Gross profit                   85,326   70,237    310,326    254,029
Selling, general and 
 administrative expenses       72,963   65,768    219,509    205,690
Reorganization costs             (363)       -      4,587          -

Operating income               12,726    4,469     86,230     48,339
Interest expense, net             430       97      1,942        291

Income before income taxes     12,296    4,372     84,288     48,048
Provision for income taxes      4,303    1,338     29,500     14,703

Net income                    $ 7,993  $ 3,034   $ 54,788   $ 33,345

Net income per share           $ 0.18   $ 0.09     $ 1.35     $ 0.95

Shares used in computing
 basic net income per share    43,513   35,026(1)  40,684(2) 35,026(1)

Diluted net income per share   $ 0.18   $ 0.09     $ 1.32     $ 0.95

Shares used in computing
 diluted net income per share  45,385   35,026(1)  41,641(2) 35,026(1)


    (1) - Represents number of shares owned by Sara Lee that were
         outstanding prior to the public offering in October 2000.

    (2) - Represents weighted average of outstanding shares before and
        after the public offering.


Supplemental information

Net income, as reported       $ 7,993  $ 3,034   $ 54,788   $ 33,345

Add back reorganization 
 costs (net of tax)             (236)       -      2,982          -

Net income, excluding 
 reorganization costs         $ 7,757  $ 3,034   $ 57,770   $ 33,345

Supplemental diluted 
 net income, excluding
 reorganization cost, 
 per share                     $ 0.17   $ 0.07     $ 1.30     $ 0.77

Shares used in computing 
 supplemental diluted
 net income, excluding 
 reorganization costs, 
 per share                     45,385   43,513(3) 44,470(3)  43,513(3)

    (3) - Common shares issued in the October 2000 public offering are
        assumed to be outstanding for all periods presented.



                              COACH, INC.
          CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
                  At March 31, 2001 and July 1, 2000
                            (in thousands)

                                         March 31,             July 1,
                                           2001                 2000
                                        (unaudited)

ASSETS

Cash                                      $ 7,241               $ 162
Receivables                                20,642              15,567
Inventories                               104,183             102,097
Other current assets                       20,701              15,862

Total current assets                      152,767             133,688

Receivable from Sara Lee                        -              63,783
Property, net                              70,609              65,184
Trademarks and other assets                28,333              33,998

Total assets                            $ 251,709           $ 296,653

LIABILITIES AND STOCKHOLDERS' EQUITY

Bank overdrafts                           $ 7,774             $ 4,940
Accounts payable                            4,564               2,926
Accrued liabilities                        78,330              71,693
Revolving credit facility                  19,000                   -
Long-term debt, classified as current          45                  40

Total current liabilities                 109,713              79,599

Long-term debt                              3,690               3,735
Other liabilities                           2,303                 511
Stockholders' equity                      136,003             212,808

Total liabilities and 
 stockholders' equity                   $ 251,709           $ 296,653