Maryland
|
52-2242751
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
Large
Accelerated Filer [ü]
|
Accelerated
Filer [ ]
|
Non-accelerated
filer [ ] (Do not check if a smaller reporting
company)
|
Small
Reporting Company [ ]
|
Page Number
|
||
PART
I – FINANCIAL INFORMATION
|
||
ITEM
1.
|
Financial
Statements
|
|
Condensed
Consolidated Balance Sheets –
|
||
At
December 26, 2009 and June 27, 2009
|
4
|
|
Condensed
Consolidated Statements of Income –
|
||
For
the Quarters and Six Months Ended
|
||
December
26, 2009 and December 27, 2008
|
5
|
|
Condensed
Consolidated Statements of Cash Flows –
|
||
For
the Six Months Ended
|
||
December
26, 2009 and December 27, 2008
|
6
|
|
Notes
to Condensed Consolidated Financial Statements
|
7
|
|
ITEM
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
|
and
Results of Operations
|
20
|
|
ITEM
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
32
|
ITEM
4.
|
Controls
and Procedures
|
33
|
PART
II – OTHER INFORMATION
|
||
ITEM
1.
|
Legal
Proceedings
|
34
|
ITEM
1A.
|
Risk
Factors
|
34
|
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
34
|
ITEM
4.
|
Submission
of Matters to a Vote of Security Holders
|
35
|
ITEM
6.
|
Exhibits
|
35
|
|
||
SIGNATURE
|
37
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||
(amounts
in thousands, except share data)
|
December
26,
|
June
27,
|
|||||||
2009
|
2009
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 1,103,177 | $ | 800,362 | ||||
Trade
accounts receivable, less allowances of $9,818 and $6,347,
respectively
|
178,849 | 108,707 | ||||||
Inventories
|
269,200 | 326,148 | ||||||
Deferred
income taxes
|
66,230 | 49,476 | ||||||
Other
current assets
|
98,936 | 111,716 | ||||||
Total
current assets
|
1,716,392 | 1,396,409 | ||||||
Long-term
investments
|
6,000 | 6,000 | ||||||
Property
and equipment, net
|
564,483 | 592,982 | ||||||
Goodwill
|
293,911 | 283,387 | ||||||
Other
assets
|
288,344 | 285,558 | ||||||
Total
assets
|
$ | 2,869,130 | $ | 2,564,336 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 120,167 | $ | 103,029 | ||||
Accrued
liabilities
|
457,557 | 348,619 | ||||||
Revolving
credit facilities
|
- | 7,496 | ||||||
Current
portion of long-term debt
|
737 | 508 | ||||||
Total
current liabilities
|
578,461 | 459,652 | ||||||
Long-term
debt
|
24,339 | 25,072 | ||||||
Other
liabilities
|
400,764 | 383,570 | ||||||
Total
liabilities
|
1,003,564 | 868,294 | ||||||
See
note on commitments and contingencies
|
||||||||
Stockholders'
Equity:
|
||||||||
Preferred
stock: (authorized 25,000,000 shares; $0.01 par value) none
issued
|
- | - | ||||||
Common
stock: (authorized 1,000,000,000 shares; $0.01 par value)
issued
|
||||||||
and
outstanding - 313,984,013 and 318,006,466 shares,
respectively
|
3,140 | 3,180 | ||||||
Additional
paid-in-capital
|
1,314,301 | 1,189,060 | ||||||
Retained
earnings
|
534,203 | 499,951 | ||||||
Accumulated
other comprehensive income
|
13,922 | 3,851 | ||||||
Total
stockholders' equity
|
1,865,566 | 1,696,042 | ||||||
Total
liabilities and stockholders' equity
|
$ | 2,869,130 | $ | 2,564,336 |
COACH,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(amounts
in thousands, except per share data)
|
(unaudited)
|
Quarter
Ended
|
Six
Months Ended
|
|||||||||||||||
December
26,
|
December
27,
|
December
26,
|
December
27,
|
|||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
sales
|
$ | 1,065,005 | $ | 960,256 | $ | 1,826,442 | $ | 1,712,785 | ||||||||
Cost
of sales
|
294,066 | 268,220 | 505,325 | 462,556 | ||||||||||||
Gross
profit
|
770,939 | 692,036 | 1,321,117 | 1,250,229 | ||||||||||||
Selling,
general and administrative expenses
|
390,102 | 343,673 | 717,033 | 668,380 | ||||||||||||
Operating
income
|
380,837 | 348,363 | 604,084 | 581,849 | ||||||||||||
Interest
income (expense), net
|
112 | 532 | (484 | ) | 3,178 | |||||||||||
Income
before provision for income taxes
|
380,949 | 348,895 | 603,600 | 585,027 | ||||||||||||
Provision
for income taxes
|
139,999 | 131,989 | 221,823 | 222,310 | ||||||||||||
Net
income
|
$ | 240,950 | $ | 216,906 | $ | 381,777 | $ | 362,717 | ||||||||
Net
income per share
|
||||||||||||||||
Basic
|
$ | 0.76 | $ | 0.67 | $ | 1.20 | $ | 1.11 | ||||||||
Diluted
|
$ | 0.75 | $ | 0.67 | $ | 1.19 | $ | 1.10 | ||||||||
Shares
used in computing net income per share
|
||||||||||||||||
Basic
|
317,458 | 323,655 | 317,761 | 327,881 | ||||||||||||
Diluted
|
321,381 | 325,168 | 321,137 | 329,716 |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(amounts
in thousands)
|
(unaudited)
|
Six
Months Ended
|
||||||||
December
26,
2009
|
December
27,
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
income
|
$ | 381,777 | $ | 362,717 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
61,433 | 61,092 | ||||||
Provision
for bad debt
|
1,454 | 3,932 | ||||||
Share-based
compensation
|
38,888 | 31,972 | ||||||
Excess
tax benefit from share-based compensation
|
(18,994 | ) | (1,354 | ) | ||||
Deferred
income taxes
|
(14,464 | ) | (15,670 | ) | ||||
Other,
net
|
(7,838 | ) | 3,602 | |||||
Changes
in operating assets and liabilities:
|
||||||||
Increase
in trade accounts receivable
|
(69,590 | ) | (77,578 | ) | ||||
Decrease
(increase) in inventories
|
59,544 | (54,258 | ) | |||||
(Increase)
decrease in other assets
|
925 | 10,512 | ||||||
Increase
(decrease) in other liabilities
|
23,969 | (7,564 | ) | |||||
Increase
(decrease) in accounts payable
|
17,431 | (16,034 | ) | |||||
Increase
in accrued liabilities
|
129,701 | 30,645 | ||||||
Net
cash provided by operating activities
|
604,236 | 332,014 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Acquisition
of distributor
|
(1,200 | ) | (14,507 | ) | ||||
Purchases
of property and equipment
|
(36,899 | ) | (84,889 | ) | ||||
Purchase
of corporate headquarters building
|
- | (103,300 | ) | |||||
Net
cash used in investing activities
|
(38,099 | ) | (202,696 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Dividend
payment
|
(47,726 | ) | - | |||||
Repurchase
of common stock
|
(300,000 | ) | (403,787 | ) | ||||
Repayment
of long-term debt
|
(504 | ) | (285 | ) | ||||
(Repayments)
borrowings of revolving credit facilities
|
(7,496 | ) | 1,896 | |||||
Proceeds
from share-based awards, net
|
67,404 | 2,116 | ||||||
Excess
tax benefit from share-based compensation
|
18,994 | 1,354 | ||||||
Net
cash used in financing activities
|
(269,328 | ) | (398,706 | ) | ||||
Effect
of changes in foreign exchange rates on cash and cash
equivalents
|
6,006 | (5,364 | ) | |||||
Increase
(decrease) in cash and cash equivalents
|
302,815 | (274,752 | ) | |||||
Cash
and cash equivalents at beginning of period
|
800,362 | 698,905 | ||||||
Cash
and cash equivalents at end of period
|
$ | 1,103,177 | $ | 424,153 |
1.
|
Basis
of Presentation and Organization
|
2.
|
Stockholders’
Equity
|
Common
Stockholders'
Equity
|
Additional
Paid-in-
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
Stockholders'
Equity
|
||||||||||||||||
Balances
at June 28, 2008
|
$ | 3,367 | $ | 1,115,041 | $ | 353,122 | $ | 18,845 | $ | 1,490,375 | ||||||||||
Net
income
|
- | - | 362,717 | - | 362,717 | |||||||||||||||
Unrealized
losses on cash flow hedging derivatives, net of tax
|
- | - | - | (13,112 | ) | (13,112 | ) | |||||||||||||
Translation
adjustments
|
- | - | - | (5,463 | ) | (5,463 | ) | |||||||||||||
Comprehensive
income
|
344,142 | |||||||||||||||||||
Shares
issued for stock options and employee
|
||||||||||||||||||||
benefit
plans
|
9 | 2,107 | - | - | 2,116 | |||||||||||||||
Share-based
compensation
|
- | 31,972 | - | - | 31,972 | |||||||||||||||
Excess
tax benefit from share-based compensation
|
- | 1,354 | - | - | 1,354 | |||||||||||||||
Repurchase
of common stock
|
(166 | ) | - | (403,621 | ) | - | (403,787 | ) | ||||||||||||
Adjustment
to adopt SFAS 158 measurement date
|
||||||||||||||||||||
provision,
net of tax
|
- | - | (183 | ) | 22 | (161 | ) | |||||||||||||
Balances
at December 27, 2008
|
$ | 3,210 | $ | 1,150,474 | $ | 312,035 | $ | 292 | $ | 1,466,011 | ||||||||||
Balances
at June 27, 2009
|
$ | 3,180 | $ | 1,189,060 | $ | 499,951 | $ | 3,851 | $ | 1,696,042 | ||||||||||
Net
income
|
- | - | 381,777 | - | 381,777 | |||||||||||||||
Unrealized
gains on cash flow hedging derivatives, net of tax
|
- | - | - | 1,126 | 1,126 | |||||||||||||||
Translation
adjustments
|
- | - | - | 8,945 | 8,945 | |||||||||||||||
Comprehensive
income
|
391,848 | |||||||||||||||||||
Shares
issued for stock options and employee
|
||||||||||||||||||||
benefit
plans
|
45 | 67,359 | - | - | 67,404 | |||||||||||||||
Share-based
compensation
|
- | 38,888 | - | - | 38,888 | |||||||||||||||
Excess
tax benefit from share-based compensation
|
- | 18,994 | - | - | 18,994 | |||||||||||||||
Repurchase
of common stock
|
(85 | ) | - | (299,915 | ) | - | (300,000 | ) | ||||||||||||
Dividend
declared
|
- | - | (47,610 | ) | - | (47,610 | ) | |||||||||||||
Balances
at December 26, 2009
|
$ | 3,140 | $ | 1,314,301 | $ | 534,203 | $ | 13,922 | $ | 1,865,566 |
December
26,
|
June
27,
|
|||||||
2009
|
2009
|
|||||||
Cumulative
translation adjustments
|
$ | 16,542 | $ | 7,597 | ||||
Cumulative
effect of previously adopted accounting
pronouncements,
net of taxes
|
(3,411 | ) | (3,411 | ) | ||||
Unrealized
gains/(losses) on cash flow hedging derivatives,
net
of taxes of $537 and $(245)
|
791 | (335 | ) | |||||
Accumulated
other comprehensive income
|
$ | 13,922 | $ | 3,851 | ||||
3.
|
Earnings
Per Share
|
Quarter
Ended
|
Six
Months Ended
|
|||||||||||||||
December
26,
|
December
27,
|
December
26,
|
December
27,
|
|||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
income
|
$ | 240,950 | $ | 216,906 | $ | 381,777 | $ | 362,717 | ||||||||
Total
weighted-average basic shares
|
317,458 | 323,655 | 317,761 | 327,881 | ||||||||||||
Dilutive
securities:
|
||||||||||||||||
Employee
benefit and
|
||||||||||||||||
share
award plans
|
1,181 | 41 | 996 | 250 | ||||||||||||
Stock
option programs
|
2,742 | 1,472 | 2,380 | 1,585 | ||||||||||||
Total
weighted-average diluted shares
|
321,381 | 325,168 | 321,137 | 329,716 | ||||||||||||
Net
income per share:
|
||||||||||||||||
Basic
|
$ | 0.76 | $ | 0.67 | $ | 1.20 | $ | 1.11 | ||||||||
Diluted
|
$ | 0.75 | $ | 0.67 | $ | 1.19 | $ | 1.10 | ||||||||
4.
|
Share-Based
Compensation
|
Quarter
Ended
|
Six
Months Ended
|
|||||||||||||||
December
26,
|
December
27,
|
December
26,
|
December
27,
|
|||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Share-based
compensation expense
|
$ | 19,920 | $ | 18,734 | $ | 38,888 | $ | 31,972 | ||||||||
Income
tax benefit related to
|
||||||||||||||||
share-based
compensation expense
|
6,957 | 6,706 | 13,622 | 11,359 |
Number
of
Options
Outstanding
|
Weighted-Average
Exercise Price
|
|||||||
|
||||||||
Outstanding
at June 27, 2009
|
31,287 | $ | 29.12 | |||||
Granted
|
3,616 | 29.50 | ||||||
Exercised
|
(4,053 | ) | 17.63 | |||||
Forfeited
or expired
|
(729 | ) | 33.28 | |||||
Outstanding
at December 26, 2009
|
30,121 | $ | 30.61 | |||||
Vested
and expected to vest at December 26, 2009
|
30,047 | $ | 30.62 | |||||
Exercisable
at December 26, 2009
|
20,222 | 30.64 |
|
Number
of Non-vested Share Units
|
Weighted-Average
Grant-Date Fair Value
|
||||||
Non-vested
at June 27, 2009
|
2,583 | $ | 29.36 | |||||
Granted
|
1,975 | 29.64 | ||||||
Vested
|
(600 | ) | 30.34 | |||||
Forfeited
|
(119 | ) | 32.90 | |||||
Non-vested
at December 26, 2009
|
3,839 | $ | 29.24 |
5.
|
Fair
Value Measurements
|
Level
2
|
Level
3
|
|||||||||||||||
December
26,
|
December
27,
|
December
26,
|
December
27,
|
|||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Assets:
|
||||||||||||||||
Long-term
investment - auction
rate security
(a)
|
$ | - | $ | - | $ | 6,000 | $ | 6,000 | ||||||||
Derivative
assets - zero-cost
collar options
(b)
|
1,043 | - | - | - | ||||||||||||
Total
|
$ | 1,043 | $ | - | $ | 6,000 | $ | 6,000 | ||||||||
Liabilities:
|
||||||||||||||||
Derivative
liabilities - zero-cost
collar options
(b)
|
$ | 931 | $ | 13,810 | $ | - | $ | - | ||||||||
Derivative
liabilities - cross-currency
swap
(c)
|
- | - | 46,480 | 47,815 | ||||||||||||
Total
|
$ | 931 | $ | 13,810 | $ | 46,480 | $ | 47,815 |
Auction
Rate Security
|
||||
Balance
at June 28, 2008
|
$ | 8,000 | ||
Unrealized
other-than-temporary loss, recognized
in selling, general and administrative expenses
|
(2,000 | ) | ||
Balance
at December 27, 2008
|
$ | 6,000 |
Cross-Currency
Swap
|
||||
Balance
at June 27, 2009
|
$ | 36,118 | ||
Unrealized
loss, recorded in accumulated other comprehensive income
|
10,362 | |||
Balance
at December 26, 2009
|
$ | 46,480 | ||
Balance
at June 28, 2008
|
$ | 5,540 | ||
Unrealized
loss, recorded in accumulated other comprehensive income
|
42,275 | |||
Balance
at December 27, 2008
|
$ | 47,815 |
6.
|
Commitments and
Contingencies
|
7.
|
Derivative Instruments and
Hedging
Activities
|
Derivatives
Designated as Hedging
|
Balance
Sheet
|
Fair
Value
|
||||||||
Instruments
|
Classification
|
At
December 26, 2009
|
At
June 27, 2009
|
|||||||
Foreign
exchange contracts
|
Other
Current Assets
|
$ | 1,043 | $ | - | |||||
Total
derivative assets
|
$ | 1,043 | $ | - | ||||||
Foreign
exchange contracts
|
Accrued
Liabilities
|
$ | 47,411 | $ | 37,061 | |||||
Total
derivative liabilities
|
$ | 47,411 | $ | 37,061 |
Amount
of Gain or (Loss) Recognized in OCI on Derivatives (Effective
Portion)
|
||||||||||||||||
Derivatives
in Cash Flow Hedging Relationships
|
Quarter
Ended
|
Six
Months Ended
|
||||||||||||||
December
26,
2009
|
December
27,
2008
|
December
26,
2009
|
December
27,
2008
|
|||||||||||||
Foreign
exchange contracts
|
$ | 279 | $ | (14,124 | ) | $ | (1,079 | ) | $ | (12,532 | ) | |||||
Total
|
$ | 279 | $ | (14,124 | ) | $ | (1,079 | ) | $ | (12,532 | ) |
Location
of Gain or (Loss)
|
Amount
of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective
Portion)
|
|||||||||||||||
Reclassified
from Accumulated
|
Quarter
Ended
|
Six
Months Ended
|
||||||||||||||
OCI
into Income (Effective
|
December
26,
|
December
27,
|
December
26,
|
December
27,
|
||||||||||||
Portion)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Cost
of Sales
|
$ | (1,615 | ) | $ | 1,562 | $ | (3,804 | ) | $ | 979 | ||||||
Total
|
$ | (1,615 | ) | $ | 1,562 | $ | (3,804 | ) | $ | 979 |
December
26,
|
June
27,
|
|||||||
2009
|
2009
|
|||||||
Balance
at beginning of period
|
$ | (335 | ) | $ | 6,943 | |||
Net
losses transferred to earnings
|
2,205 | 2,915 | ||||||
Change
in fair value
|
(1,079 | ) | (10,193 | ) | ||||
Balance
at end of period
|
$ | 791 | $ | (335 | ) |
8.
|
Goodwill
and Intangible Assets
|
Direct-to-
|
||||||||||||
Consumer
|
Indirect
|
Total
|
||||||||||
Goodwill
balance at June 27, 2009
|
$ | 281,871 | $ | 1,516 | $ | 283,387 | ||||||
Foreign
exchange impact
|
10,524 | - | 10,524 | |||||||||
Goodwill
balance at December 26, 2009
|
$ | 292,395 | $ | 1,516 | $ | 293,911 | ||||||
9.
|
Segment
Information
|
Direct-to-
|
Corporate
|
|||||||||||||||
Consumer
|
Indirect
|
Unallocated
|
Total
|
|||||||||||||
Quarter
Ended December 26, 2009
|
||||||||||||||||
Net
sales
|
$ | 933,938 | $ | 131,067 | $ | - | $ | 1,065,005 | ||||||||
Operating
income (loss)
|
394,832 | 75,155 | (89,150 | ) | 380,837 | |||||||||||
Income
(loss) before provision for
|
||||||||||||||||
income
taxes and discontinued operations
|
394,832 | 75,155 | (89,038 | ) | 380,949 | |||||||||||
Depreciation
and amortization expense
|
19,788 | 1,797 | 6,468 | 28,053 | ||||||||||||
Additions
to long-lived assets
|
3,330 | 401 | 6,457 | 10,188 | ||||||||||||
Quarter
Ended December 27, 2008
|
||||||||||||||||
Net
sales
|
$ | 817,521 | $ | 142,735 | $ | - | $ | 960,256 | ||||||||
Operating
income (loss)
|
335,393 | 82,445 | (69,475 | ) | 348,363 | |||||||||||
Income
(loss) before provision for
|
||||||||||||||||
income
taxes and discontinued operations
|
335,393 | 82,445 | (68,943 | ) | 348,895 | |||||||||||
Depreciation
and amortization expense
|
21,040 | 2,559 | 6,802 | 30,401 | ||||||||||||
Additions
to long-lived assets
|
8,515 | 6,202 | 141,108 | 155,825 | ||||||||||||
Six
Months Ended December 26, 2009
|
||||||||||||||||
Net
sales
|
$ | 1,587,830 | $ | 238,612 | $ | - | $ | 1,826,442 | ||||||||
Operating
income (loss)
|
641,653 | 137,422 | (174,991 | ) | 604,084 | |||||||||||
Income
(loss) before provision for
|
||||||||||||||||
income
taxes and discontinued operations
|
641,653 | 137,422 | (175,475 | ) | 603,600 | |||||||||||
Depreciation
and amortization expense
|
40,424 | 4,597 | 16,412 | 61,433 | ||||||||||||
Additions
to long-lived assets
|
17,966 | 1,155 | 10,239 | 29,360 | ||||||||||||
Six
Months Ended December 27, 2008
|
||||||||||||||||
Net
sales
|
$ | 1,409,757 | $ | 303,028 | $ | - | $ | 1,712,785 | ||||||||
Operating
income (loss)
|
551,053 | 182,641 | (151,845 | ) | 581,849 | |||||||||||
Income
(loss) before provision for
|
||||||||||||||||
income
taxes and discontinued operations
|
551,053 | 182,641 | (148,667 | ) | 585,027 | |||||||||||
Depreciation
and amortization expense
|
42,401 | 5,007 | 13,684 | 61,092 | ||||||||||||
Additions
to long-lived assets
|
35,224 | 4,278 | 147,680 | 187,182 |
Quarter
Ended
|
Six
Months Ended
|
|||||||||||||||
December
26,
|
December
27,
|
December
26,
|
December
27,
|
|||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Production
variances
|
$ | 13,697 | $ | 3,321 | $ | 19,050 | $ | 9,118 | ||||||||
Advertising,
marketing and design
|
(42,793 | ) | (38,890 | ) | (75,159 | ) | (76,796 | ) | ||||||||
Administration
and
|
||||||||||||||||
information
systems
|
(48,489 | ) | (20,312 | ) | (96,630 | ) | (58,396 | ) | ||||||||
Distribution
and customer service
|
(11,565 | ) | (13,594 | ) | (22,252 | ) | (25,771 | ) | ||||||||
Total
corporate unallocated
|
$ | (89,150 | ) | $ | (69,475 | ) | $ | (174,991 | ) | $ | (151,845 | ) |
10.
|
Stock
Repurchase Program
|
11.
|
Recent
Accounting Developments
|
12.
|
Subsequent
Event Evaluation
|
ITEM 2.
|
Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
|
|
·
|
Build
market share in the North American women’s accessories
market. As part of our culture of innovation and continuous
improvement, we implemented a number of initiatives to accelerate the
level of newness, elevate our product offering and enhance the in-store
experience. These initiatives will enable us to continue to
leverage our leadership position in the
market.
|
|
·
|
Continue
to grow our North American retail store base primarily by opening stores
in new markets and adding stores in under-penetrated existing
markets. We believe that North America can support about 500
retail stores in total, including up to 30 in Canada. We
currently plan to open approximately 20 new retail stores in fiscal 2010,
of which 14 will be in new markets. The pace of our future
retail store openings will depend upon the economic environment and
reflect opportunities in the
marketplace.
|
|
·
|
Raise
brand awareness in emerging markets, notably in China, where our brand
awareness is increasing and the category is developing
rapidly. We currently plan to open approximately 15 new
locations in China in fiscal 2010.
|
|
·
|
Continue
to expand market share with the Japanese consumer, driving growth in Japan
primarily by opening new retail locations. We believe that
Japan can support about 180 locations in total. We currently
plan to open approximately seven new locations in Japan in fiscal
2010.
|
|
·
|
Earnings
per diluted share increased 12.4% to
$0.75.
|
|
·
|
Net
sales increased 10.9% to $1.1 billion, exceeding a billion for the first
time in the Company’s history.
|
|
·
|
Direct-to-consumer
sales rose 14.2% to $933.9 million.
|
|
·
|
Comparable
store sales in North America increased 3.2%, primarily due
to improved conversion in our factory and full-priced
stores.
|
|
·
|
Coach
Japan sales, when translated into U.S. dollars, rose 6.7% to $204.1
million. This increase includes a 8.7% positive impact from
currency translation.
|
|
·
|
In
North America, Coach opened three new retail stores and two new factory
stores, bringing the total number of retail and factory stores to 343 and
118, respectively, at the end of the second quarter of fiscal
2010. We also expanded one factory store in North
America.
|
|
·
|
Coach
Japan opened one new location, bringing the total number of locations at
the end of the second quarter of fiscal 2010 to 158. In
addition, we expanded one location.
|
|
·
|
Coach
China opened four net new locations, bringing the total number of
locations at the end of the second quarter of fiscal 2010 to
37.
|
Quarter
Ended
|
||||||||||||||||||||||||
December
26, 2009
|
December
27, 2008
|
Variance
|
||||||||||||||||||||||
(dollars
in millions, except per share data)
|
||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||||||
Amount
|
net
sales
|
Amount
|
net
sales
|
Amount
|
%
|
|||||||||||||||||||
Net
sales
|
$ | 1,065.0 | 100.0 |
%
|
$ | 960.3 | 100.0 |
%
|
$ | 104.7 | 10.9 | % | ||||||||||||
Gross
profit
|
770.9 | 72.4 | 692.0 | 72.1 | 78.9 | 11.4 | ||||||||||||||||||
Selling,
general and
|
||||||||||||||||||||||||
administrative
expenses
|
390.1 | 36.6 | 343.7 | 35.8 | 46.4 | 13.5 | ||||||||||||||||||
Operating
income
|
380.8 | 35.8 | 348.4 | 36.3 | 32.5 | 9.3 | ||||||||||||||||||
Interest
income, net
|
0.1 | 0.0 | 0.5 | 0.1 | (0.4 | ) | (78.9 | ) | ||||||||||||||||
Provision
for income taxes
|
140.0 | 13.1 | 132.0 | 13.7 | 8.0 | 6.1 | ||||||||||||||||||
Net
income
|
241.0 | 22.6 | 216.9 | 22.6 | 24.0 | 11.1 | ||||||||||||||||||
Net
income per share:
|
||||||||||||||||||||||||
Basic
|
$ | 0.76 | $ | 0.67 | $ | 0.09 | 13.3 | % | ||||||||||||||||
Diluted
|
$ | 0.75 | $ | 0.67 | $ | 0.08 | 12.4 | % |
Quarter
Ended
|
||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Percentage
of
|
||||||||||||||||||||
Net
Sales
|
Total
Net Sales
|
|||||||||||||||||||
December
26,
|
December
27,
|
Rate
of
|
December
26,
|
December
27,
|
||||||||||||||||
2009
|
2008
|
Increase
|
2009
|
2008
|
||||||||||||||||
(dollars
in millions)
|
||||||||||||||||||||
Direct-to-consumer
|
$ | 933.9 | $ | 817.6 | 14.2 | % | 87.7 | % | 85.1 | % | ||||||||||
Indirect
|
131.1 | 142.7 | (8.1 | ) | 12.3 | 14.9 | ||||||||||||||
Total
net sales
|
$ | 1,065.0 | $ | 960.3 | 10.9 | 100.0 | % | 100.0 | % |
Six
Months Ended
|
||||||||||||||||||||||||
December
26, 2009
|
December
27, 2008
|
Variance
|
||||||||||||||||||||||
(dollars
in millions, except per share data)
|
||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||||||
Amount
|
net
sales
|
Amount
|
net
sales
|
Amount
|
%
|
|||||||||||||||||||
Net
sales
|
$ | 1,826.4 | 100.0 | % | $ | 1,712.8 | 100.0 | % | $ | 113.7 | 6.6 | % | ||||||||||||
Gross
profit
|
1,321.1 | 72.3 | 1,250.2 | 73.0 | 70.9 | 5.7 | ||||||||||||||||||
Selling,
general and
|
||||||||||||||||||||||||
administrative
expenses
|
717.0 | 39.3 | 668.4 | 39.0 | 48.7 | 7.3 | ||||||||||||||||||
Operating
income
|
604.1 | 33.1 | 581.8 | 34.0 | 22.2 | 3.8 | ||||||||||||||||||
Interest
(expense) income, net
|
(0.5 | ) | (0.0 | ) | 3.2 | 0.2 | (3.7 | ) | (115.2 | ) | ||||||||||||||
Provision
for income taxes
|
221.8 | 12.1 | 222.3 | 13.0 | (0.5 | ) | (0.2 | ) | ||||||||||||||||
Net
income
|
381.8 | 20.9 | 362.7 | 21.2 | 19.1 | 5.3 | ||||||||||||||||||
Net
income per share:
|
||||||||||||||||||||||||
Basic
|
$ | 1.20 | $ | 1.11 | $ | 0.10 | 8.6 | % | ||||||||||||||||
Diluted
|
$ | 1.19 | $ | 1.10 | $ | 0.09 | 8.1 | % |
Six
Months Ended
|
||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Percentage
of
|
||||||||||||||||||||
Net
Sales
|
Total
Net Sales
|
|||||||||||||||||||
December
26,
|
December
27,
|
Rate
of
|
December
26,
|
December
27,
|
||||||||||||||||
2009
|
2008
|
Increase
|
2009
|
2008
|
||||||||||||||||
(dollars
in millions)
|
||||||||||||||||||||
Direct-to-consumer
|
$ | 1,587.8 | $ | 1,409.8 | 12.6 | % | 86.9 | % | 82.3 | % | ||||||||||
Indirect
|
238.6 | 303.0 | (21.3 | ) | 13.1 | 17.7 | ||||||||||||||
Total
net sales
|
$ | 1,826.4 | $ | 1,712.8 | 6.6 | 100.0 | % | 100.0 | % |
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
Approximate
Dollar Value of Shares that May Yet be Purchased Under the Plans or
Programs (1)
|
||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
Period
4 (9/27/09 - 10/31/09)
|
- | $ | - | - | $ | 709,625 | ||||||||||
Period
5 (11/1/09 - 11/28/09)
|
3,837 | 34.30 | 3,837 | 578,040 | ||||||||||||
Period
6 (11/29/09 - 12/26/09)
|
4,728 | 35.62 | 4,728 | 409,625 | ||||||||||||
Total
|
8,565 | $ | 35.03 | 8,565 |
(1)
|
The
Company repurchases its common shares under repurchase programs that were
approved by the Board of Directors as
follows:
|
Date
Share Repurchase Programs were Publicly Announced
|
Total
Dollar Amount Approved
|
Expiration
Date of Plan
|
||
August
25, 2008
|
$
1.0 billion
|
June
2010
|
Director
|
Votes
For
|
Votes
Withheld
|
||||||
Lew
Frankfort
|
265,031,890 | 7,742,830 | ||||||
Susan
Kropf
|
194,268,239 | 78,506,481 | ||||||
Gary
Loveman
|
194,433,772 | 78,340,948 | ||||||
Ivan
Menezes
|
192,126,012 | 80,648,708 | ||||||
Irene
Miller
|
180,693,559 | 92,081,161 | ||||||
Michael
Murphy
|
181,937,997 | 90,836,723 | ||||||
Jide
Zeitlin
|
194,334,428 | 78,440,292 |
Votes
For
|
Votes
Against
|
Votes
Abstaining
|
Broker
Non-votes
|
|||
221,256,525
|
22,999,565
|
131,813
|
28,386,817
|
Votes
For
|
Votes
Against
|
Votes
Abstaining
|
Broker
Non-votes
|
|||
19,473,656
|
184,121,584
|
40,792,663
|
28,386,817
|
|
(a)
|
Exhibits
|
|
31.1
|
Rule
13(a) – 14(a)/15(d) – 14(a)
Certifications
|
|
32.1
|
Section
1350 Certifications
|
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
COACH,
INC.
|
||
(Registrant)
|
||
By. :
|
/s/ Michael F. Devine,
III
|
|
Name:
|
Michael
F. Devine, III
|
|
Title:
|
Executive
Vice President,
|
|
Chief
Financial Officer and
|
||
Chief
Accounting Officer
|