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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 21, 2003
Coach, Inc.
(Exact name of registrant as specified in its charter)
Maryland 1-16153 52-2242751
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(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
516 West 34th Street, New York, NY 10001
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(Address of principal executive offices) (Zip Code)
(212) 594-1850
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(Registrant's telephone number, including area code)
Item 7: Exhibits.
(c) The following exhibit is being furnished herewith:
99.1 Text of Press Release, dated October 21, 2003
Item 9: Regulation FD Disclosure; Item 12: Results of Operations and Financial
Condition.
On October 21, 2003, Coach, Inc. (the "Company") issued a press release
(the "Press Release") in which the Company announced its preliminary financial
results for its fiscal quarter ended September 27, 2003. All information in the
press release is being furnished to the Securities and Exchange Commission and
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934.
This Form 8-K and the Press Release attached hereto as Exhibit 99.1 are
being furnished to the Securities and Exchange Commission under Item 9 of Form
8-K in satisfaction of the public disclosure requirements of Regulation FD. This
Form 8-K and the Press Release, insofar as they disclose historical information
regarding the Company's results of operations or financial condition for the
fiscal quarter ended September 27, 2003, are also being furnished to the
Securities and Exchange Commission under Item 12 of Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 21, 2003
COACH, INC.
By: /s/ Carole P. Sadler
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Carole P. Sadler
Senior Vice President, General Counsel
and Secretary
EXHIBIT INDEX
99.1 Text of Press Release, dated October 21, 2003
Exhibit 99.1
Coach Reports First Quarter Earnings Per Share of $0.22; Up over 80%
and Ahead of Revised Expectations; Results Driven by a 34% Sales Gain
and Significant Margin Expansion
NEW YORK--(BUSINESS WIRE)--Oct. 21, 2003--Coach, Inc. (NYSE: COH),
a leading marketer of modern classic American accessories, today
announced an increase of over 80% in earnings per diluted share to
$0.22 for its first fiscal quarter ended September 27, 2003, up from
$0.12 per diluted share a year ago. This substantial increase in
earnings from the prior year's first quarter reflected a 34% gain in
net sales combined with operating margin improvement.
In the first quarter, net sales were $258.4 million, 34% higher
than the $192.8 million reported in the same period of the prior year.
Net income rose 88% to $42.3 million, or $0.22 per diluted share,
compared with $22.5 million, or $0.12 per diluted share in the prior
year. These results were ahead of the analysts' recently revised
consensus estimate of $0.18 per share. Earnings per share numbers have
been adjusted for the two-for-one split, which was effected on October
1, 2003.
Lew Frankfort, Chairman and Chief Executive Officer of Coach,
Inc., said, "Our first quarter results were driven by both the
vitality of the Coach brand and the enthusiastic consumer response to
our product offerings - notably handbags and small leather goods -
across all major business units. We're confident that the strength of
the Coach brand, combined with our clearly articulated roadmap for
growth, will allow Coach to continue to deliver superior financial
results over our planning horizon."
During the quarter, gross profit rose 43% to $187.9 million from
$131.2 million a year ago. Gross margin expanded by 460 basis points
from 68.1% to 72.7% driven by product mix, sourcing initiatives and
channel mix. SG&A expenses as a percentage of net sales declined 360
basis points to 45.0%, compared to the 48.6% reported in the year-ago
quarter.
First fiscal quarter sales results in each of Coach's primary
channels of distribution grew as follows:
-- Direct to consumer sales, which consist primarily of sales at
U.S. Coach stores, rose 26% to $134.5 million from $106.6
million in the comparable period of the prior year. Comparable
store sales for the quarter rose 17.8%, with retail stores up
29.2% and factory stores up 7.6%.
-- Indirect sales increased 44% to $123.9 million from $86.2
million in the same period last year. Results were driven
primarily by strong gains in international sales both in Japan
and other international markets; while US department store
sales and business-to-business results were also robust. Sales
growth in Japan - through CJI - reflected double-digit sales
gains in comparable locations and the excellent contribution
of new location openings.
During the first quarter of fiscal 2003, the company opened seven
and closed one Coach retail store and opened one factory store,
bringing the total to 162 retail stores and 77 factory stores at
September 27, 2003. In addition, four retail stores were expanded.
Mr. Frankfort continued, "Our first quarter results were fueled by
remarkably successful transitional and fall introductions. Starting in
July with the introduction of the Soho Mini Signature offering,
momentum continued in August with the launch of the Soho Leather and
Suede group. In September, Hamptons Leather returned for the fall
season featuring new silhouettes, such as the buckle hobo and buckle
demi zip, both key styles during the month, as well as updated
favorites, such as the carryall. Our broader pricing strategy also was
implemented during the quarter, as new, more sophisticated silhouettes
and styles at higher price points sold through well. For the holiday
quarter, we just brought out the Soho Duffle handbag group, which is
already generating very strong results. All of these factors, in
combination with momentum which has continued into October throughout
our major businesses, reinforce our confidence that we will have a
strong holiday season."
"In the second quarter, as planned, we will add at least three
more retail stores in the U.S., bringing the total to 10 new retail
stores before holiday. We will also be adding about 10 new locations
in Japan over the fiscal year which may include the opening of a third
flagship store."
The company now estimates second fiscal quarter sales of at least
$385 million, representing a year-over-year increase of at least 25%,
and earnings per diluted share of at least $0.44. For the fiscal year
2004 the company expects to generate sales of at least $1.2 billion,
an increase of at least 27% from prior year, and earnings per diluted
share of at least $1.09.
Coach will host a conference call to review these results at 8:30
a.m. (ET) today, October 21, 2003. Interested parties may listen to
the webcast by accessing www.coach.com/investors on the Internet or
dialing into 1-888-405-2080 and Relations. A telephone replay will be
available starting at 12:00 noon today, for a period of five business
days. The number to call is 1-888-282-0028. A webcast replay of this
call will be available for five business days on the Coach website.
Coach, with headquarters in New York, is a leading American
marketer of fine accessories and gifts for women and men, including
handbags, women's and men's small leathergoods, business cases,
weekend and travel accessories, footwear, watches, outerwear, jewelry,
sunwear, furniture 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 1-800-223-8647 and
through Coach's website at www.coach.com. Coach's shares are traded on
The New York Stock Exchange under the symbol COH.
This press release contains forward-looking statements based on
management's current expectations. These statements can be identified
by the use of forward-looking terminology such as "may," "will,"
"should," "expect," "intend," "estimate," "are positioned to,"
"continue," "project," "guidance," "forecast," "anticipated," or
comparable terms. Future results may differ materially from
management's current expectations, based upon risks and uncertainties
such as expected economic trends, the ability to anticipate consumer
preferences, the ability to control costs, etc. Please refer to
Coach's latest Annual Report on Form 10-K for a complete list of risk
factors.
COACH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Thirteen Weeks Ended September 27, 2003 and September 28,
2002
(in thousands, except per share data)
(unaudited)
THIRTEEN WEEKS
ENDED
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September September
27, 28,
2003 2002
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Net sales $258,375 $192,791
Cost of sales 70,466 61,567
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Gross profit 187,909 131,224
Selling, general and administrative expense 116,284 93,616
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Operating income 71,625 37,608
Interest (income), net (405) (165)
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Income before income taxes and minority interest 72,030 37,773
Income taxes 27,008 13,977
Minority interest, net of tax 2,693 1,316
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Net income $42,329 $22,480
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Basic net income per share $0.23 $0.13
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Shares used in computing
basic net income per share 183,588 177,458
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Diluted net income per share $0.22 $0.12
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Shares used in computing
diluted net income per share 190,959 183,984
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COACH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
At September 27, 2003, June 28, 2003 and September 28, 2002
(in thousands)
September June 28, September
27, 28,
2003 2003 2002
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(unaudited) (unaudited)
ASSETS
Cash and cash equivalents $255,357 $229,176 $44,033
Receivables 59,859 35,470 45,009
Inventories 176,794 143,807 152,724
Other current assets 37,431 40,085 26,154
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Total current assets 529,441 448,538 267,920
Property and equipment, net 125,119 118,547 97,099
Other assets 49,930 50,567 61,330
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Total assets $704,490 $617,652 $426,349
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $41,537 $26,637 $32,547
Accrued liabilities 108,240 108,273 96,751
Subsidiary credit facilities 28,233 26,471 35,042
Current portion of long-term debt 115 80 80
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Total current liabilities 178,125 161,461 164,420
Long-term debt 3,420 3,535 3,535
Other liabilities 5,027 3,572 3,640
Minority interest 24,849 22,155 15,863
Stockholders' equity 493,069 426,929 238,891
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Total liabilities and stockholders'
equity $704,490 $617,652 $426,349
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CONTACT: Coach
Analysts & Media
Andrea Shaw Resnick, 212/629-2618