NEW YORK--(BUSINESS WIRE)--Oct. 30, 2000--Coach, Inc. (NYSE: COH), a leading marketer of modern classic American accessories, announced today 14 percent growth in net sales in its first fiscal quarter ended September 30, 2000 - its first quarterly report as a publicly-traded company.

This strong sales increase, combined with improved margins, resulted in a 270% rise in net income versus the prior year, including the impact of reorganization costs. Excluding these costs, net income rose 428%.

In the first quarter, net sales were $134.6 million, 14% higher than $118.0 million in the same period of the prior year. Net earnings, after the impact of reorganization costs, rose 270% to $7.6 million, or $0.17 per fully diluted share, compared with $2.0 million, or $0.05 per share, in the first quarter of fiscal year 2000.

During the quarter, gross profit rose 34.3% to $85.0 million from $63.3 million a year ago. Gross margin expanded by 953 basis points from 53.6% to 63.2%, primarily due to the continuing impact of manufacturing and sourcing cost reductions. SG&A expenses as a percentage of net sales declined to 50.7% from 51.1% in the year-ago quarter.

The company recorded a reorganization charge amounting to $5.0 million (pretax) relating to the previously announced closing of a manufacturing facility in Florida. Exclusive of these costs, first quarter net earnings were $10.8 million, 428% higher than prior year, or $0.25 per share.

Sales results in each of Coach's primary channels of distribution grew as follows:

• Direct to consumer sales, which consist primarily of sales at Coach stores, rose 14.4% to $80.5 million during the first quarter from $70.4 million in the comparable period of the prior year. Comparable store sales rose 5.5%, with comparable store sales at retail stores up 3.8% and at factory stores up 6.7%. After a slow start, comparable sales in retail stores for the first quarter accelerated in August with the introduction of our fall product. This favorable trend continued through September and into October.

• Wholesale sales increased 13.4% to $54.0 million in the first quarter from $47.7 million in the comparable period of the prior year. This gain reflected increased demand for new products in all wholesale channels, highlighted by a double-digit increase in comparable location sales to Japanese consumers worldwide.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, said, "Our first quarter results are an excellent way to begin our journey as a public company. They confirm that consumers are enthusiastically embracing Coach's broader, modern product offering, reinvigorated retail environment and the accelerated product flow of our lifestyle collections."

"We're confident that our growth strategies will enable us to continue to gain share in the large and growing global market for fine accessories and gifts."

Coach completed its initial public offering of 8.5 million shares of common stock in October 2000.

Coach, Inc. is a leading designer, producer and marketer of modern classic American accessories that complement the diverse lifestyles of discerning women and men. The Company's primary products are handbags, women's and men's accessories, business cases, luggage and travel accessories, time management products, leather outerwear, gloves, scarves, watches, eyewear, footwear and furniture.

Coach will host a conference call to review these results at 8:30 a.m. (ET) on October 31, 2000. Interested parties may listen to the Webcast by accessing www.coach.com/investors/default.asp or www.vcall.com on the Internet or dialing in to 1-800-314-7867, confirmation code 423344. A telephone replay will be available starting at 12:00 p.m. on October 31, for six days, the number to call is 1-888-203-1112. A webcast replay of this call will be available for 5 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," or "continue," or the negative thereof or comparable terminology. 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 Weeks Ended September 30, 2000 and October 2,1999
                 (in thousands, except per share data)
                              (unaudited)

                                          THIRTEEN WEEKS ENDED
                                      September 30,   October 2,
                                          2000          1999

Net sales                            $    134,552  $   118,032
Cost of sales                              49,564       54,727
                                     ------------- ------------
Gross profit                               84,988       63,305
Selling, general and
 administrative expenses                   68,246       60,256
Reorganization costs                        4,950            -
                                     ------------- ------------

Operating income                           11,792        3,049
Interest expense, net                         113           97
                                     ------------- ------------

Income before income taxes                 11,679        2,952
Income taxes                                4,088          903
                                     ------------- ------------

Net income                           $      7,591  $     2,049
                                     ============= ============

Pro forma as adjusted basic
 net income per share                $       0.17  $      0.05
                                     ============= ============

Shares used in computing pro
 forma as adjusted basic net 
 income per share                          43,513       43,513
                                     ============= ============

Pro forma as adjusted
 diluted net income per share        $       0.17  $      0.05
                                     ============= ============

Shares used in computing
 pro forma as adjusted
 diluted net income per share              43,670       43,670
                                     ============= ============

Supplemental information

Net income, as reported              $      7,591  $     2,049

Add back reorganization
 costs (net of tax)                         3,218            -
                                     ------------- ------------

Net income, excluding
 reorganization costs                $     10,809  $     2,049
                                     ============= ============

Pro forma as adjusted
 basic net income, excluding
 reorganization costs, per share     $       0.25  $      0.05
                                     ============= ============

Pro forma as adjusted
 diluted net income, excluding
 reorganization costs, per share     $       0.25  $      0.05
                                     ============= ============


                              COACH, INC.
              CONDENSED CONSOLIDATED AND COMBINED BALANCE
             SHEETS At September 30, 2000 and July 1, 2000
                            (in thousands)

                               Pro forma
                              September 30,   September 30,    July 1,
                                 2000             2000           2000
                              (unaudited)     (unaudited)
ASSETS

Cash                          $       164     $       164   $      162
Receivables                        24,855          24,855       15,567
Inventories                       119,397         119,397      102,097
Other current assets               17,047          17,047       15,862
                              ------------  --------------  ----------
Total current assets              161,463         161,463      133,688

Receivable from Sara Lee                -               -       63,783
Property, net                      66,314          66,314       65,184
Trademarks and other assets        33,718          33,718       33,998
                              ------------  --------------  ----------

Total assets                  $   261,495     $   261,495   $  296,653
                              ============  ==============  ==========

LIABILITIES AND
 STOCKHOLDERS' EQUITY

Bank overdrafts               $     5,408     $     5,408   $    4,940
Accounts payable                    4,999           4,999        2,926
Accrued liabilities                82,948          78,662       71,693
Revolving credit facility           5,671           9,957            -
Long-term debt
 due within 1 year                     40              40           40
                              ------------  --------------  ----------

Total current liabilities          99,066          99,066       79,599

Long-term debt                     71,735           3,735        3,735
Other liabilities                   2,158           2,158          511
Common stockholders' equity        88,536         156,536      212,808
                              ------------  --------------  ----------

Total liabilities and
 stockholders' equity         $   261,495     $   261,495   $  296,653
                              ============  ==============  ==========

    Pro forma amounts at September 30, 2000 reflect the completion of
the initial public offering of common stock, the assumption of long
term debt and the partial repayment of this debt from the proceeds of
the stock issuance. These transactions were completed in October 2000.