Coach (COH) Fiscal 4Q17 Results: Weak Quarter, Sales Miss Expectations

Executive Summary

• Coach reported fiscal 4Q17 adjusted EPS of $0.50, beating the consensus estimate by a penny and up from $0.45 in the year-ago quarter. Revenues were $1.13 billion, down slightly from $1.15 billion in the year-ago period and below the consensus estimate of $1.15 billion.
• Net sales for the Stuart Weitzman brand totaled $88 million, up 4.7% year over year. Excluding the additional week in FY16, net sales increased by 15% on a reported basis. The brand reported high SG&A costs year over year, reflecting an increase in store occupancy costs and the company’s strategic investments in its team and infrastructure.
• Coach expects revenues for FY18 to increase by about 30% versus FY17 due to $1.2 billion in additional revenue from the acquired Kate Spade brand and low-single-digit organic growth. The company expects EPS of $2.35–$2.40, which represents an increase of approximately 10%–12% for the year and includes low-to mid-single-digit accretion from the acquisition of Kate Spade.