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Exhibit 99.1
Coach, Inc. Reports Fiscal 2017 Fourth Quarter and Full Year Results
Board Declares Quarterly Dividend
NEW YORK--(BUSINESS WIRE)--August 15, 2017--Coach, Inc. (NYSE:COH) (SEHK:6388), a leading New York-based house of modern luxury accessories and lifestyle brands, today reported fourth quarter and full year results for the period ended July 1, 2017.
Victor Luis, Chief Executive Officer of Coach, Inc., said, “Our strong fourth quarter results – in which we achieved mid-single-digit North America comparable store sales for the Coach brand and drove solid growth at Stuart Weitzman - capped an excellent FY17 performance for the company. For the year, we posted a double-digit increase in net income as we continued to make progress on our brand and company transformation plan. We generated positive Coach brand North American comps in each quarter, while driving solid international Coach brand sales gains, notably in Europe and Mainland China. Importantly, the Coach brand evolved across the key consumer pillars of product, stores and marketing, with strategic actions including a broader 1941 collection, dual gender runway shows, the execution of a differentiated store concept and new collaborations and campaigns further elevating brand perception.”
“We were also very pleased with the overall contribution of the Stuart Weitzman brand as we invested in the brand, both in stores and most significantly in people, bringing in the key leadership and design talent to drive performance in both growing the global footwear category and in their nascent accessories business.”
“We also took a major step in our corporate transformation with the acquisition of Kate Spade & Company, which closed in July, becoming the first New York-based house of modern luxury lifestyle brands. Kate Spade brings a new, unique brand attitude and an additional consumer segment to the Coach, Inc. portfolio and we expect that this acquisition will enhance our position in the attractive and growing $80 billion global premium handbag and accessories, footwear and outerwear market.”
53rd Week Discussion - Fiscal 2016:
The results for the fiscal fourth quarter and year ending July 1, 2017 included 13 and 52 weeks, while the fiscal year ending July 2, 2016 included 14 and 53 weeks, respectively. As previously reported, the 53rd week contributed about $84 million to 2016 fiscal fourth quarter and year sales, including $77 million in Coach brand revenue and $7 million associated with Stuart Weitzman. The additional week added $0.07 to earnings per diluted share in fiscal 2016.
Non-Cash Charges and Non-GAAP Reconciliation Items - Fiscal 2017:
Non-Cash Charges:
During the fourth fiscal quarter of 2017, the Company recorded non-cash impairment charges related to stores and a negotiated reduction in a purchase commitment which increased SG&A expenses by $20 million on both a reported and non-GAAP basis.
Non-GAAP Reconciliation Items:
In addition, the Company also recorded the following on a reported basis:
During the fiscal fourth quarter of 2017, these three items decreased the Company’s consolidated reported gross profit by approximately $2 million, decreased SG&A expenses by about $16 million and increased interest expense by approximately $10 million. Including the net positive impact on the provision for income taxes, reported net income was favorably impacted by $10 million or about $0.03 per diluted share in the fourth quarter.
During the full fiscal year of 2017, these three items decreased the Company’s consolidated reported gross profit by approximately $3 million, increased SG&A expenses by about $22 million and increased interest expense by approximately $10 million. Including the net positive impact on the provision for income taxes, reported net income was negatively impacted by $18 million or about $0.06 per diluted share in fiscal 2017.
Overview of Fourth Quarter 2017 Consolidated, Coach, Inc. Results:
Coach Brand Fourth Quarter of 2017 Results:
Fourth fiscal quarter sales results in each of Coach’s primary segments were as follows:
Stuart Weitzman Fourth Quarter of 2017 Results:
Overview of Full Year 2017 Consolidated, Coach, Inc. Results:
The company also announced that its Board of Directors declared a quarterly cash dividend of $0.3375 per common share, maintaining an annual rate of $1.35. The dividend is payable on October 2, 2017 to shareholders of record as of the close of business on September 8, 2017.
Mr. Luis added, “Three years ago we laid out an ambitious plan to transform the Coach brand, with a goal of increasing relevancy and improving consumer perceptions. During this time, we’ve done just that, by making the necessary and significant investments across all aspects of the Coach brand and business. We are extremely pleased with the progress we’ve made, having largely attained our strategic goals, in spite of the impact of the volatile retail and macroeconomic environment on our core category. Today, after the successful integration of Stuart Weitzman and the acquisition of Kate Spade, we are at an exciting and pivotal moment in our journey. In an unpredictable environment, we are evolving to drive our long-term success by reinventing ourselves, moving from a single-brand, specialty retailer, to a true house of emotional, desirable brands built on our unique values. We are transforming into an entirely different, truly multi-brand company, creating a more agile organization and infrastructure to support a new corporate structure, while making certain each brand has the resources in place to innovate and drive its distinct personality.”
“Naturally, we are focused on driving top and bottom-line growth for Coach, Inc., but we are also committed to taking the right steps to achieve sustainable long-term profitability through the health of our brands, by making the appropriate investments and carefully managing our distribution channels. This balance is critical to informing our strategic plan as we move forward into the next chapter as the first New York-based house of modern luxury lifestyle brands,” Mr. Luis concluded.
Fiscal Year 2018 Outlook
The following fiscal 2018 guidance is provided on a non-GAAP basis and includes projected Kate Spade results subsequent to the closing of the transaction on July 11, 2017.
The company expects revenues for fiscal 2018 to increase about 30% versus fiscal 2017, to $5.8 to $5.9 billion, with low-single digit organic growth and the acquisition of Kate Spade adding over $1.2 billion in revenue.
In addition, the company is projecting operating income growth of 22% to 25% versus fiscal 2017 driven by mid-single digit organic growth, the acquisition of Kate Spade, and estimated synergies of $30-$35 million. These synergies are expected to offset in part the reduction in profitability from the strategic and deliberate pullback of Kate Spade wholesale disposition and online flash sales channels. Taken together, the Kate Spade business and resulting synergies are expected to contribute approximately $130-$140 million to operating income.
Interest expense is expected to be approximately $90 million for the year while the full year fiscal 2018 tax rate is projected at about 25% to 26%.
Overall, the company is projecting earnings per diluted share in the range of $2.35-$2.40, an increase of about 10% to 12% for the year, including low-to-mid- single digit accretion from the acquisition of Kate Spade, consistent with the previously communicated forecast.
Fiscal Year 2018 Outlook - Non-GAAP Disclosure:
The company is not able to provide a full reconciliation of the non-GAAP financial measures to GAAP because certain material items that impact these measures, such as the timing and exact amount of charges related to our acquisition and integration related charges, have not yet occurred or are out of the company’s control. Accordingly, a reconciliation of our non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort. Where possible, the company has identified the estimated impact of the items excluded from its fiscal 2018 guidance.
This fiscal 2018 non-GAAP guidance excludes (1) expected pre-tax charges of around $10 million attributable to the company’s Operational Efficiency Plan and (2) currently estimated Kate Spade acquisition and integration costs and short-term purchase accounting impacts. The company expects to pay $40-$45 million related to acquisition transaction fees and currently estimates that it will incur approximately $150-$200 million in pre-tax charges in fiscal 2018, which are attributable to Kate Spade integration-related costs. The company continues to fully develop its integration plan.
In fiscal 2018, the company is adopting Accounting Standard Update (ASU) 2016-09 for the accounting of employee share-based payments, which was issued by the Financial Accounting Standards Board. This will affect the company’s effective tax rate because certain tax impacts that were previously recorded to equity will now be included in income tax expense. Further, because the tax impacts are defined by the company’s stock price when Restricted Stock Units (RSUs) and Performance Restricted Stock Units (PRSUs) vest and when employees exercise their stock options, the timing and the amount of the impact cannot be estimated. The majority of RSUs and PRSUs vest in the first quarter of the fiscal year, and accordingly, it is likely that the first fiscal quarter could be most impacted.
Change in Reportable Segments:
Given the acquisition of Kate Spade & Company in July 2017, the company intends to change its reportable segments beginning in fiscal 2018. The company’s new reportable segments will be as follows: Coach, Kate Spade, and Stuart Weitzman.
This change in reporting is consistent with how the company now runs the business, establishes the overall business strategy, allocates resources, and assesses performance. Segment information under these new reportable segments will be provided in an 8-K filed with the SEC in conjunction with the company’s fiscal 2018 first quarter earnings announcement.
Conference Call Details:
Coach will host a conference call to review these results at 8:30 a.m. (ET) today, August 15, 2017. Interested parties may listen to the webcast by accessing www.coach.com/investors on the Internet or dialing into 1-877-510-8087 or 1-862-298-9015 and providing the Conference ID 44861138. A telephone replay will be available starting at 12:00 p.m. (ET) today, for a period of five business days. To access the telephone replay, call 1-800-585-8367 or 1-404-537-3406 and enter the Conference ID above. A webcast replay of the earnings conference call will also be available for five business days on the Coach website.
The company expects to report fiscal 2018 first quarter financial results on Tuesday, November 7, 2017. To receive notification of future announcements, please register at www.coach.com/investors ("Subscribe to E-Mail Alerts").
Coach, Inc. is a New York-based house of modern luxury lifestyle brands. The company’s portfolio includes the Coach, kate spade new york, and Stuart Weitzman brands. Our company and our brands are founded upon a consumer-led view of luxury that stands for inclusivity and approachability. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across channels and geographies. Coach, Inc.’s common stock is traded on the New York Stock Exchange under the symbol COH and Coach’s Hong Kong Depositary Receipts are traded on The Stock Exchange of Hong Kong Limited under the symbol 6388.
Neither the Hong Kong Depositary Receipts nor the Hong Kong Depositary Shares evidenced thereby have been or will be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to, or for the account of, a U.S. Person (within the meaning of Regulation S under the Securities Act), absent registration or an applicable exemption from the registration requirements. Hedging transactions involving these securities may not be conducted unless in compliance with the Securities Act.
This information to be made available in this press release may contain forward-looking statements based on management's current expectations. Forward-looking statements include, but are not limited to, the statements under “Fiscal Year 2018 Outlook,” as well as statements that can be identified by the use of forward-looking terminology such as "may," "will," “can,” "should," "expect," "intend," "estimate," "continue," "project," "guidance," "forecast," "anticipate," “moving,” “leveraging,” “developing,” “driving,” “targeting,” “assume,” “plan,” “pursue,” “look forward to,” “achieve” or comparable terms. Future results may differ materially from management's current expectations, based upon a number of important factors, including risks and uncertainties such as expected economic trends, the ability to anticipate consumer preferences, the ability to control costs and successfully execute our transformation and operational efficiency initiatives and growth strategies and our ability to achieve intended benefits, cost savings and synergies from acquisitions, etc. Please refer to Coach Inc.’s latest Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission for a complete list of risks and important factors.
COACH, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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For the Quarters and Years Ended July 1, 2017 and July 2, 2016 |
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(in millions, except per share data) |
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(unaudited) | (unaudited) | (audited) | |||||||||||||||
QUARTER ENDED | YEAR ENDED | ||||||||||||||||
July 1, | July 2, | July 1, | July 2, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net sales | $ | 1,133.8 | $ | 1,154.6 | $ | 4,488.3 | $ | 4,491.8 | |||||||||
Cost of sales | 379.3 | 371.9 | 1,407.2 | 1,440.5 | |||||||||||||
Gross profit | 754.5 | 782.7 | 3,081.1 | 3,051.3 | |||||||||||||
Selling, general and administrative expenses | 561.5 | 665.9 | 2,293.7 | 2,397.8 | |||||||||||||
Operating income |
193.0 | 116.8 | 787.4 | 653.5 | |||||||||||||
Interest expense, net | 13.6 | 7.4 | 28.4 | 26.9 | |||||||||||||
Income before provision for income taxes | 179.4 | 109.4 | 759.0 | 626.6 | |||||||||||||
Provision for income taxes | 27.7 | 27.9 | 168.0 | 166.1 | |||||||||||||
Net Income | $ | 151.7 | $ | 81.5 | $ | 591.0 | $ | 460.5 | |||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.54 | $ | 0.29 | $ | 2.11 | $ | 1.66 | |||||||||
Diluted | $ | 0.53 | $ | 0.29 | $ | 2.09 | $ | 1.65 | |||||||||
Shares used in computing | |||||||||||||||||
net income per share: | |||||||||||||||||
Basic | 281.5 | 278.2 | 280.6 | 277.6 | |||||||||||||
Diluted | 284.7 | 281.1 | 282.8 | 279.3 | |||||||||||||
COACH, INC. |
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GAAP TO NON-GAAP RECONCILIATION |
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For the Quarters Ended July 1, 2017 and July 2, 2016 |
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(in millions, except per share data) |
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(unaudited) |
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July 1, 2017 | |||||||||||||||||||||||
Stuart Weitzman | Kate Spade | ||||||||||||||||||||||
GAAP Basis | Operational | Acquisition-Related | Acquisition-Related | Non-GAAP Basis | |||||||||||||||||||
(As Reported) | Efficiency Plan (1) | Costs (2) | Costs (3) | (Excluding Items) | |||||||||||||||||||
Gross profit | $ | 754.5 | $ | - | $ | (2.3 | ) | $ | - | $ | 756.8 | ||||||||||||
Selling, general and administrative expenses | $ | 561.5 | $ | 6.8 | $ | (30.0 | ) | $ | 7.4 | $ | 577.3 | ||||||||||||
Operating income | $ | 193.0 | $ | (6.8 | ) | $ | 27.7 | $ | (7.4 | ) | $ | 179.5 | |||||||||||
Income before provision for income taxes | $ | 179.4 | $ | (6.8 | ) | $ | 27.7 | $ | (16.9 | ) | $ | 175.4 | |||||||||||
Provision for income taxes | $ | 27.7 | $ | (4.0 | ) | $ | 4.7 | $ | (6.7 | ) | $ | 33.7 | |||||||||||
Net income | $ | 151.7 | $ | (2.8 | ) | $ | 23.0 | $ | (10.2 | ) | $ | 141.7 | |||||||||||
Diluted net income per share | $ | 0.53 | $ | (0.01 | ) | $ | 0.08 | $ | (0.04 | ) | $ | 0.50 | |||||||||||
July 2, 2016 | |||||||||||||||||||||||
Stuart Weitzman | |||||||||||||||||||||||
GAAP Basis | Transformation and | Operational | Acquisition-Related | Non-GAAP Basis | |||||||||||||||||||
(As Reported) | Other Actions (4) | Efficiency Plan (1) | Costs (2) | (Excluding Items) | |||||||||||||||||||
Gross profit | $ | 782.7 | $ | - | $ | - | $ | (0.2 | ) | $ | 782.9 | ||||||||||||
Selling, general and administrative expenses | $ | 665.9 | $ | 8.2 | $ | 43.9 | $ | 5.7 | $ | 608.1 | |||||||||||||
Operating income | $ | 116.8 | $ | (8.2 | ) | $ | (43.9 | ) | $ | (5.9 | ) | $ | 174.8 | ||||||||||
Income before provision for income taxes | $ | 109.4 | $ | (8.2 | ) | $ | (43.9 | ) | $ | (5.9 | ) | $ | 167.4 | ||||||||||
Provision for income taxes | $ | 27.9 | $ | (1.7 | ) | $ | (10.3 | ) | $ | (1.4 | ) | $ | 41.3 | ||||||||||
Net income | $ | 81.5 | $ | (6.5 | ) | $ | (33.6 | ) | $ | (4.5 | ) | $ | 126.1 | ||||||||||
Diluted net income per share | $ | 0.29 | $ | (0.02 | ) | $ | (0.12 | ) | $ | (0.02 | ) | $ | 0.45 | ||||||||||
(1) Amounts as of July 1, 2017 reflect Coach brand charges primarily related to organizational efficiency and technology infrastructure costs. Amounts as of July 2, 2016 reflect Coach brand charges primarily related to organizational efficiency costs and to a lesser extent, network optimization costs. | ||
(2) Amounts as of July 1, 2017 and July 2, 2016 represent charges attributable to acquisition-related costs and limited life purchase accounting impacts, related to the acquisition of Stuart Weitzman Holdings LLC. The Company recorded the following during the quarter ended July 1, 2017: - Acquisition-related income of $27.7 million, primarily related to a reduction in projected contingent payments, partially offset by integration-related costs. |
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• Coach brand: $35.0 million of this income was recorded within the Coach brand. |
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• Stuart Weitzman brand: $5.0 million of SG&A expenses and $2.3 million of cost of sales were recorded within the Stuart Weitzman brand. |
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The Company recorded the following during the quarter ended July 2, 2016: | ||
- Acquisition-related costs of $5.4 million, primarily related to contingent payments and integration-related activities. | ||
• Coach brand: $4.2 million of these SG&A expenses were recorded within the Coach brand. |
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• Stuart Weitzman brand: $1.2 million of these SG&A expenses were recorded within the Stuart Weitzman brand. |
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- Limited life purchase accounting impacts of $0.5 million, recorded within the Stuart Weitzman brand, primarily due to the amortization of the fair value of the limited life distributor relationships. |
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(3) Amounts as of July 1, 2017 represent charges attributable to the acquisition of Kate Spade & Company, recorded within the Coach brand. The Company recorded $9.5 million to interest expense and $7.4 million to SG&A expenses. | ||
(4) The Transformation Plan was completed in fiscal 2016. Amounts as of July 2, 2016 related to Coach brand lease termination charges and organizational efficiency costs. | ||
COACH, INC. |
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GAAP TO NON-GAAP RECONCILIATION |
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For the Years Ended July 1, 2017 and July 2, 2016 |
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(in millions, except per share data) |
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(unaudited) |
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July 1, 2017 | |||||||||||||||||||||||
Stuart Weitzman | Kate Spade | ||||||||||||||||||||||
GAAP Basis | Operational | Acquisition-Related | Acquisition-Related | Non-GAAP Basis | |||||||||||||||||||
(As Reported) | Efficiency Plan (1) | Costs (2) | Costs (3) | (Excluding Items) | |||||||||||||||||||
Gross profit | $ | 3,081.1 | $ | - | $ | (2.9 | ) | $ | - | $ | 3,084.0 | ||||||||||||
Selling, general and administrative expenses | $ | 2,293.7 | $ | 24.0 | $ | (9.1 | ) | $ | 7.4 | $ | 2,271.4 | ||||||||||||
Operating income | $ | 787.4 | $ | (24.0 | ) | $ | 6.2 | $ | (7.4 | ) | $ | 812.6 | |||||||||||
Income before provision for income taxes | $ | 759.0 | $ | (24.0 | ) | $ | 6.2 | $ | (16.9 | ) | $ | 793.7 | |||||||||||
Provision for income taxes | $ | 168.0 | $ | (8.3 | ) | $ | (1.5 | ) | $ | (6.6 | ) | $ | 184.4 | ||||||||||
Net income | $ | 591.0 | $ | (15.7 | ) | $ | 7.7 | $ | (10.3 | ) | $ | 609.3 | |||||||||||
Diluted net income per share | $ | 2.09 | $ | (0.05 | ) | $ | 0.03 | $ | (0.04 | ) | $ | 2.15 | |||||||||||
July 2, 2016 | |||||||||||||||||||||||
Stuart Weitzman | |||||||||||||||||||||||
GAAP Basis | Transformation and | Operational | Acquisition-Related | Non-GAAP Basis | |||||||||||||||||||
(As Reported) | Other Actions (4) | Efficiency Plan (1) | Costs (2) | (Excluding Items) | |||||||||||||||||||
Gross profit | $ | 3,051.3 | $ | - | $ | - | $ | (1.1 | ) | $ | 3,052.4 | ||||||||||||
Selling, general and administrative expenses | $ | 2,397.8 | $ | 44.1 | $ | 43.9 | $ | 34.0 | $ | 2,275.8 | |||||||||||||
Operating income | $ | 653.5 | $ | (44.1 | ) | $ | (43.9 | ) | $ | (35.1 | ) | $ | 776.6 | ||||||||||
Income before provision for income taxes | $ | 626.6 | $ | (44.1 | ) | $ | (43.9 | ) | $ | (35.1 | ) | $ | 749.7 | ||||||||||
Provision for income taxes | $ | 166.1 | $ | (10.7 | ) | $ | (10.3 | ) | $ | (10.9 | ) | $ | 198.0 | ||||||||||
Net income | $ | 460.5 | $ | (33.4 | ) | $ | (33.6 | ) | $ | (24.2 | ) | $ | 551.7 | ||||||||||
Diluted net income per share | $ | 1.65 | $ | (0.12 | ) | $ | (0.12 | ) | $ | (0.09 | ) | $ | 1.98 | ||||||||||
(1) Amounts as of July 1, 2017 reflect Coach brand charges primarily related to organizational efficiency costs, technology infrastructure costs and to a lesser extent, network optimization costs. Amounts as of July 2, 2016 reflect Coach brand charges primarily related to organizational efficiency costs and to a lesser extent, network optimization costs. |
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(2) Amounts as of July 1, 2017 and July 2, 2016 represent charges attributable to acquisition-related costs and limited life purchase accounting impacts, related to the acquisition of Stuart Weitzman Holdings LLC. The Company recorded the following during the year ended July 1, 2017: - Acquisition-related income of $6.2 million, primarily related to a reduction in projected contingent payments, partially offset by integration-related costs. |
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• Coach brand: $26.8 million of this income was recorded within the Coach brand. |
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• Stuart Weitzman brand: $17.7 million of SG&A expenses and $2.9 million of cost of sales were recorded within the Stuart Weitzman brand. |
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The Company recorded the following during the year ended July 2, 2016: | ||
- Acquisition-related costs of $27.6 million, primarily related to contingent payments and integration-related activities. | ||
• Coach brand: $19.4 million of these SG&A expenses were recorded within the Coach brand. |
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• Stuart Weitzman brand: $8.2 million of these SG&A expenses were recorded within the Stuart Weitzman brand. |
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- Limited life purchase accounting impacts of $7.5 million, recorded within the Stuart Weitzman brand, primarily due to the amortization of the fair value of the order backlog asset, limited life distributor relationships and inventory step-up. |
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(3) Amounts as of July 1, 2017 represent charges attributable to the acquisition of Kate Spade & Company, recorded within the Coach brand. The Company recorded $9.5 million to interest expense and $7.4 million to SG&A expenses. | ||
(4) The transformation plan was completed in fiscal 2016. Amounts as of July 2, 2016 related to Coach brand organizational efficiency costs, lease termination charges and accelerated depreciation as a result of store renovations. | ||
The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The Company's management does not, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Further, the non-GAAP measures utilized by the Company may be unique to the Company, as they may be different from non-GAAP measures used by other companies. The financial information presented above, as well as gross margin, SG&A expense ratio, and operating margin, have been presented both including and excluding the effect of certain items related to our Transformation Plan, our Operational Efficiency Plan and Acquisition-Related Costs for Coach, Inc., as well as the Coach brand, which includes the Company’s North America and International segment, as well as Other and Corporate Unallocated results, and the Stuart Weitzman brand, which includes the Company’s Stuart Weitzman segment. The Company’s North America comparable store sales are presented for the 13-weeks ending July 1, 2017 versus the analogous 13-week period ended July 2, 2016 for comparability. The Company’s sales and earnings per diluted share results are presented both including and excluding the impact of the 53rd week in fiscal year 2016.
The Company operates on a global basis and reports financial results in U.S. dollars in accordance with GAAP. Percentage increases/decreases in net sales and direct sales for the Company’s North America segment and net sales for the Company, the Coach brand, the Company’s International segment, Greater China, Coach Japan and the Company’s remaining directly operated businesses in Asia have been presented both including and excluding currency fluctuation effects from translating foreign-denominated sales into U.S. dollars and compared to the same periods in the prior quarter and fiscal year. The Company calculates constant currency revenue results by translating current period revenue in local currency using the prior period’s monthly average currency conversion rate.
Guidance for certain financial information for the fiscal year ending June 30, 2018 has also been presented on a non-GAAP basis.
Management utilizes these non-GAAP and constant currency measures to conduct and evaluate its business during its regular review of operating results for the periods affected and to make decisions about Company resources and performance. The Company believes presenting these non-GAAP measures, which exclude items that are not comparable from period to period, is useful to investors and others in evaluating the Company’s ongoing operating and financial results in a manner that is consistent with management’s evaluation of business performance and understanding how such results compare with the Company’s historical performance. Additionally, the Company believes presenting these metrics on a constant currency basis will help investors and analysts to understand the effect of significant year-over-year foreign currency exchange rate fluctuations on these performance measures and provide a framework to assess how business is performing and expected to perform excluding these effects.
COACH, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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At July 1, 2017 and July 2, 2016 |
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(in millions) |
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(unaudited) | (audited) | |||||||
July 1, | July 2, | |||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Cash, cash equivalents and short-term investments | $ | 3,083.6 | $ | 1,319.4 | ||||
Receivables | 268.0 | 245.2 | ||||||
Inventories | 469.7 | 459.2 | ||||||
Other current assets | 132.0 | 149.1 | ||||||
Total current assets | 3,953.3 | 2,172.9 | ||||||
Property and equipment, net | 691.4 | 919.5 | ||||||
Other noncurrent assets | 1,186.9 | 1,800.3 | ||||||
Total assets | $ | 5,831.6 | $ | 4,892.7 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Accounts payable | $ | 194.6 | $ | 186.7 | ||||
Accrued liabilities | 559.2 | 625.0 | ||||||
Current debt | - | 15.0 | ||||||
Total current liabilities | 753.8 | 826.7 | ||||||
Long-term debt | 1,579.5 | 861.2 | ||||||
Other liabilities | 496.4 | 521.9 | ||||||
Stockholders' equity | 3,001.9 | 2,682.9 | ||||||
Total liabilities and stockholders' equity | $ | 5,831.6 | $ | 4,892.7 | ||||
COACH, INC. |
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Store Count |
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At April 1, 2017 and July 1, 2017 |
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(unaudited) |
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As of | As of | |||||||||||
Directly-Operated Store Count: |
April 1, 2017 | Openings | (Closures) | July 1, 2017 | ||||||||
Coach |
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North America | 424 | 1 | (6) | 419 | ||||||||
Japan | 184 | 0 | 0 | 184 | ||||||||
Greater China (PRC, Hong Kong & Macau) | 197 | 4 | (2) | 199 | ||||||||
Asia - Other | 103 | 3 | (1) | 105 | ||||||||
Europe | 47 | 9 | (1) | 55 | ||||||||
Stuart Weitzman |
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Global | 82 | 0 | (1) | 81 | ||||||||
COACH, INC. |
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Store Count |
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At July 2, 2016 and July 1, 2017 |
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(unaudited) |
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As of | As of | |||||||||||
Directly-Operated Store Count: |
July 2, 2016 | Openings | (Closures) | July 1, 2017 | ||||||||
Coach |
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North America | 432 | 4 | (17) | 419 | ||||||||
Japan | 195 | 0 | (11) | 184 | ||||||||
Greater China (PRC, Hong Kong & Macau) | 185 | 24 | (10) | 199 | ||||||||
Asia - Other | 103 | 6 | (4) | 105 | ||||||||
Europe | 39 | 19 | (3) | 55 | ||||||||
Stuart Weitzman |
||||||||||||
Global | 75 | 9 | (3) | 81 |
CONTACT:
Coach, Inc.
Analysts & Media:
Andrea Shaw Resnick, 212-629-2618
Global Head of Investor Relations and Corporate Communications
or
Christina Colone, 212-946-7252
Senior Director, Investor Relations
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Declines in traffic could result in store impairment charges if expected future cash flows of the related asset group do not exceed the carrying value.
balance sheet changes, net, were a use of cash of $6.3 million in fiscal 2016 as compared to a source of cash of $17.8 million in fiscal 2015, primarily due to increased store-related related receivables during fiscal 2016 as compared to fiscal 2015 as a result of select new store openings, including our Fifth Avenue and Regent Street stores, described above.
The $1.40 billion increase in net cash was primarily due to proceeds from the sale of the Companys equity method investment in Hudson Yards of $680.6 million in fiscal 2017, the impact of net cash proceeds from maturities and sales of investments of $67.7 million in fiscal 2017, compared to net purchases of investments of $238.8 million in fiscal 2016.
Accounts receivable was a use of cash of $28.3 million in fiscal 2016 compared to a source of cash of $0.3 million in fiscal 2015, primarily driven by increased wholesale shipments for Coach brand and an increase in credit card receivables in fiscal 2016 as compared to fiscal 2015 driven by the timing of sales in the last week of fiscal 2016.
The gross margin decline of 150 basis points or 160 basis points excluding non-GAAP items was primarily due to the unfavorable effects of foreign currency on the Coach brand, and the inclusion of the Stuart Weitzman business in our full year fiscal 2016 results which contains lower gross margins compared to the Coach brand.
Foreign currency negatively impacted gross...Read more
As of July 1, 2017,...Read more
Key operational and cost measures...Read more
Operational Efficiency Plan - Total...Read more
Excluding the unfavorable impact of...Read more
Inventories were a use of...Read more
Stuart Weitzman Net Sales increased...Read more
The reported results during fiscal...Read more
Operational Efficiency Plan - $43.9...Read more
Operational Efficiency Plan - $43.9...Read more
The decrease in SG&A expenses...Read more
to Non-GAAP Reconciliation herein, SG&A...Read more
Excluding the negative impact of...Read more
Furthermore, gross margin for the...Read more
Excluding non-GAAP adjustments of $25.2...Read more
Net sales in fiscal 2017...Read more
The increase in SG&A expenses...Read more
Net sales increased 7.2% or...Read more
The reported results during fiscal...Read more
Excluding non-GAAP charges, SG&A expenses...Read more
Furthermore, an improved mix of...Read more
During the fourth quarter of...Read more
Excluding Non-GAAP charges of $2.9...Read more
Excluding Non-GAAP charges of $1.1...Read more
A decrease in product demand...Read more
The decrease was primarily due...Read more
On May 4, 2015, pursuant...Read more
North America sales were also...Read more
SG&A expenses decreased by 4.3%...Read more
See Note 2, Significant Accounting...Read more
Net income per diluted share...Read more
Net income per diluted share...Read more
Operating margin increased to 17.5%...Read more
Acquisition-Related Costs - $24.6 million...Read more
Net income per diluted share...Read more
The accounting policies discussed below...Read more
Stuart Weitzman Operating Income decreased...Read more
Furthermore, operating margin for the...Read more
Excluding non-GAAP adjustments of $123.1...Read more
The decrease in our effective...Read more
Net cash provided by operating...Read more
The reported gross profit, SG&A...Read more
Operating margin increased 110 basis...Read more
Gross margin increased 50 basis...Read more
Gross margin increased 180 basis...Read more
Gross margin increased 20 basis...Read more
During the fourth quarter of...Read more
SG&A expenses decreased 4.3% or...Read more
Borrowings under the Facility bear...Read more
SG&A expenses increased 4.7% or...Read more
We are focused on driving...Read more
In the second fiscal quarter,...Read more
Net sales in fiscal 2016...Read more
Excluding non-GAAP adjustments, unallocated operating...Read more
Excluding non-GAAP adjustments, unallocated operating...Read more
Corporate Unallocated Gross Profit increased...Read more
Given the relatively small excess...Read more
Stuart Weitzman Operating Income increased...Read more
Excluding non-GAAP charges as discussed...Read more
Excluding non-GAAP charges as discussed...Read more
This $5.7 million increase is...Read more
This increase was primarily due...Read more
The increase in net cash...Read more
North America Net Sales decreased...Read more
Excluding non-GAAP charges, net income...Read more
Transformation and Other Actions -...Read more
We believe these non-GAAP measures...Read more
These fiscal 2015 actions taken...Read more
These actions taken together increased...Read more
Several factors could impact the...Read more
The decrease in SG&A expenses...Read more
Raise brand awareness and increase...Read more
Further, these non-GAAP measures may...Read more
Excluding the favorable impact of...Read more
The $133.8 million decline in...Read more
Management believes that cash flows...Read more
Corporate Unallocated Operating Expense decreased...Read more
Corporate Unallocated Operating Expense decreased...Read more
Excluding the impact of foreign...Read more
The increase in gross margin...Read more
The Company currently estimates that...Read more
The overall decline in changes...Read more
Acquisition-Related Costs - $35.1 million...Read more
Acquisition-Related Costs - $35.1 million...Read more
The remaining charges under this...Read more
The Company expects that the...Read more
On May 7, 2017, the...Read more
This decrease was primarily driven...Read more
Gross margin decreased 210 basis...Read more
Gross margin decreased 150 basis...Read more
The increase is primarily due...Read more
This approach uses significant estimates...Read more
Excluding non-GAAP adjustments of $22.3...Read more
This increase was due to...Read more
Accrued liabilities were a use...Read more
Our results have been impacted...Read more
Internet revenue from sales of...Read more
Gross profit increased by 1.0%...Read more
By providing the non-GAAP measures,...Read more
Operating margin decreased 250...Read more
International Net Sales increased 5.1%...Read more
Our bricks and mortar comparable...Read more
International Net Sales increased 0.7%...Read more
The increase in gross margin...Read more
Excluding the impact of the...Read more
Excluding the impact of the...Read more
Gross margin for the Coach...Read more
Stuart Weitzman Gross Profit increased...Read more
Gross profit increased 1.0% or...Read more
International Gross Profit increased 1.4%...Read more
Excluding the 53rd week in...Read more
International Gross Profit increased 3.0%...Read more
Gross profit increased 4.9% or...Read more
Revenue is recognized by the...Read more
increased 6.7% or $32.1 million...Read more
Operating margin decreased to 14.5%...Read more
The Company had no outstanding...Read more
This increase was primarily due...Read more
The effective tax rate was...Read more
The effective tax rate was...Read more
This increase was primarily due...Read more
Net income increased 28.3% in...Read more
Excluding the impact of the...Read more
Several organizations that monitor the...Read more
For a detailed discussion of...Read more
Operating income increased 20.5% or...Read more
Operating income increased 5.7% or...Read more
Actual results could differ from...Read more
As a percentage of net...Read more
As a percentage of net...Read more
Net income increased 14.4% or...Read more
Net income increased 28.3% or...Read more
Accounts payable were a use...Read more
Accordingly, certain increases and decreases...Read more
Goodwill and Other Intangible Assets...Read more
Estimates of fair value for...Read more
Accounts payable were a source...Read more
The Company generally performs its...Read more
decreased 5.5% or $40.3 million...Read more
The Company also expects to...Read more
Gross profit for the Coach...Read more
Actual distributed shares are calculated...Read more
Operating income for the Coach...Read more
In connection with an acquisition,...Read more
Other liabilities were a use...Read more
Net cash provided by operating...Read more
Returns and allowances require pre-approval...Read more
Determination of the fair value...Read more
Financial Statements, Disclosures and Schedules
Inside this 10-K Annual Report
Material Contracts, Statements, Certifications & more
Coach Inc provided additional information to their SEC Filing as exhibits
Ticker: COH
CIK: 1116132
Form Type: 10-K Annual Report
Accession Number: 0001116132-17-000011
Submitted to the SEC: Fri Aug 18 2017 4:29:30 PM EST
Accepted by the SEC: Fri Aug 18 2017
Period: Saturday, July 1, 2017
Industry: Leather And Leather Products