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Coach reported mixed results this morning, sending shares down more than 14 per cent before U.S. markets opened.The company blamed a highly promotional environment in its domestic stores for the weak sales figures.
Coach tallied revenue of $1.16 billion during the period, roughly $40 million below expectations.
The handbag manufacturer earned $0.86 a share, a penny above forecasts.
The company eliminated coupons at its more than 162 North American factory stores at the start of 2012 as it introduced Every Day Low Pricing in an attempt to boost margins.
But customer acceptance of the lower pricing strategy did not gain momentum, forcing Coach to change its stance this quarter.
“As a result, we responded by reinstating our prior practice of in-store couponing in a cross section of factory locations late in the period,” Coach’s Chief Executive Lew Frankfort says. “It’s important to note that we have significant pricing flexibility and a variety of marketing levers available in this channel, which allow us to balance productivity gains and margin improvement.”
Coach’s international operations continued to perform above pace, with Chinese operations growing more than 60 per cent and same-store sales up at a double-digit rate.
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