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Inside Coach International’s and Stuart Weitzman’s Fiscal 3Q17 Performances

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Evaluating Coach’s 3Q17 sales

Coach’s (COH) International business, which accounted for 43% of its top line in 3Q17, recorded a 4% YoY (year-over-year) fall in sales to $448 million. Currency exchanges reduced sales growth by 70 basis points.

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Coach brand puts up a poor show in Asia

The company’s sales in Greater China fell 2% YoY on a reported basis. However, on a constant currency basis, there was an increase of 2%, mainly driven by positive comps (comparable same-store sales) in Mainland China. Softness in Hong Kong and Macau comps, however, offset most of this growth.

Japan sales rose 2% on a reported basis, supported by the stronger US dollar. On a constant currency basis, however, sales fell 1%, impacted by a fall in Chinese tourist spending.

For the rest of Asia, sales declined at a low-double-digit rate, primarily due to the ongoing weakness in Korea, where geopolitical and macroeconomic headwinds have put pressure on domestic spending.

Falling Europe sales

The Coach brand’s total sales fell modestly in Europe on a reported basis but rose slightly on a currency-neutral basis. Direct-to-customer sales were strong and grew at a double-digit rate in constant currency. Wholesale sales, however, registered a decline, reflecting the impact of the planned shift in wholesale shipment timing.

Stuart Weitzman’s slight improvement

Coach acquired Stuart Weitzman, a leading American footwear brand, in January 2015. This business, which contributed 8% to Coach’s total revenue in fiscal 3Q17, rose 1% primarily due to the change in wholesale shipment timing.

Notably, investors looking to invest in Coach through ETFs can choose to invest in the PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD). Coach has a weight of ~2.3% in SPHD.

Continue to the next part for a look at Coach’s margins and profitability in 1Q17.

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