Coach Reports First Quarter Earnings Per Share of $0.77

  Coach Reports First Quarter Earnings Per Share of $0.77

       Completes Acquisition of Retail Businesses in Korea and Malaysia

            Establishes New $1.5 Billion Stock Repurchase Program

Business Wire

NEW YORK -- October 23, 2012

Coach, Inc. (NYSE: COH, SEHK: 6388), a leading marketer of modern classic
American accessories, today reported sales of $1.16 billion for its first
fiscal quarter ended September 29, 2012, compared with $1.05 billion reported
in the same period of the prior year, an increase of 11%. Net income for the
quarter totaled $221 million, with earnings per diluted share of $0.77. This
compared to net income of $215 million and earnings per share of $0.73 in the
prior year’s first quarter, representing increases of 3% and 6%, respectively.

Concurrently, the company also announced that its Board of Directors has
authorized the repurchase of up to $1.5 billion of its outstanding common
stock by June 30, 2015.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc., said, “We
were pleased with our results this quarter, highlighted by double-digit top
line growth, with strong comparable stores sales – most notably in North
America and China. We continued to make progress against our strategic
initiatives - enhancing our leadership position in the North American women’s
bag and accessory category through fashion innovation, aggressively growing
our international business, becoming a market leader in the Men’s accessories
category and harnessing the power of the digital world. In addition, during
the quarter, we completed the acquisition of our domestic distributors in
Korea and Malaysia.”

For the quarter, operating income totaled $332 million, up 3% from the $322
million reported in the comparable year-ago period, while operating margin was
28.6% versus 30.7% reported for the prior year. As previously announced,
long-term growth investments, notably in Asia, impacted profitability levels
in the period. During the quarter, gross profit rose 11% to $845 million from
$765 million a year ago. Gross margin remained high at 72.8%, even with prior
year. SG&A expenses as a percentage of net sales increased, reflecting the
impact of the newly-acquired retail businesses in Korea and Malaysia and
totaled 44.2%, as compared to 42.1% reported in the year-ago quarter.

The company also announced that during the first fiscal quarter, it
repurchased and retired nearly 3.1 million shares of its common stock at an
average cost of $56.59, spending a total of $175 million. At the end of the
period, about $85 million remained under the company’s prior repurchase
authorization.

As noted in Coach’s Form 8-K filing earlier this month, the company has
changed its reportable segments to a geographic focus, recognizing the
expansion and growth of sales through its international markets. Based on
these segments, first fiscal quarter sales results in each of Coach’s primary
channels of distribution were as follows:

  *Total North American sales increased 8%, to $784 million from $729 million
    last year. North American direct sales rose 11% for the quarter with
    comparable store sales up 5.5%. At POS, sales in North American 
    department stores were essentially even with prior year while shipments
    into department stores declined, as inventories were planned lower.
  *International sales increased 15% to $362 million from $314 million last
    year.  China results continued very strong, with total sales up nearly 40%
    and comparable store sales rising at a double-digit rate. Shipments into
    international wholesale accounts rose sharply reflecting strong underlying
    POS sales trends. In Japan, sales rose 1% on a constant-currency basis,
    while dollar sales were even with the prior year, adjusted for a slightly
    weaker yen.

During the first quarter of fiscal 2013 in North America, the company opened
five factory stores, including three Men’s factory stores. This brought the
total to 354 retail stores and 174 factory stores as of September 29, 2012. In
China, eight net locations were opened, bringing the total to 104. In Japan,
Coach opened one Men’s factory store. Therefore, at the end of the quarter
there were 188 total locations in Japan. As previously announced, during the
first quarter the company acquired the domestic retail Coach businesses in
Malaysia and Korea. At quarter-end, including these acquisitions, as well as
those made in FY12, the company operated seven locations in Singapore, 27 in
Taiwan, 10 in Malaysia and 48 in Korea.

Mr. Frankfort added, “We launched our new, iconic, dual gender Legacy
collection during the quarter. Inspired by our archives, this modern,
leather-based collection reinforces our distinctiveness in the marketplace.
Legacy has been embraced by consumers across all geographies and demographics,
providing us with a major platform for the years to come.”

“We are well positioned for the holiday season and remain confident in our
ability to deliver double-digit growth during our planning horizon given the
strength of the Coach brand and our increasing global expansion. Further, the
announcement today of the authorization of a new buyback program reflects this
confidence in Coach’s business outlook as well as our financial strength,” Mr.
Frankfort concluded.

Coach will host a conference call to review these results at 8:30 a.m. (ET)
today, October 23, 2012. Interested parties may listen to the webcast by
accessing www.coach.com/investors on the Internet or dialing into
1-888-405-2080 or 1-210-795-9977 and asking for the Coach earnings call led by
Andrea Shaw Resnick, SVP of Investor Relations. A telephone replay will be
available starting at 12:00 noon today, for a period of five business days.
The number to call is 1-866-352-7723 or 1-203-369-0080. A webcast replay of
the earnings conference call will also be available for five business days on
the Coach website.

Coach, with headquarters in New York, is a leading American marketer of fine
accessories and gifts for women and men, including handbags, men’s bags,
women’s and men’s small leathergoods, weekend and travel accessories,
footwear, watches, outerwear, scarves, sunwear, fragrance, jewelry and related
accessories. Coach is sold worldwide through Coach stores, select department
stores and specialty stores, and through Coach’s website at www.coach.com.
Coach’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 press release contains forward-looking statements based on management's
current expectations. These statements can be identified by the use of
forward-looking terminology such as "may," "will," "should," "expect,"
“confidence,” “trends,” "intend," "estimate," "on track," "are positioned to,"
“on course,” “opportunity,” “become,” “forward,” "continue," "project,"
"guidance," “target,” "forecast,” “achieve,” "anticipated," or comparable
terms. Future results may differ materially from management's current
expectations, based upon risks and uncertainties such as expected economic
trends, the ability to anticipate consumer preferences, the ability to control
costs, etc. Please refer to Coach’s latest Annual Report on Form 10-K for a
complete list of risk factors.

                                                          
COACH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters Ended September 29, 2012 and October 1, 2011
(in thousands, except per share data)
(unaudited)
                                                               
                                               QUARTER ENDED
                                               September 29,   October 1,
                                                2012          2011      
                                                               
Net sales                                      $ 1,161,350     $ 1,050,359
                                                               
Cost of sales                                   316,182       285,706   
                                                               
Gross profit                                     845,168         764,653
                                                               
Selling, general and
administrative expenses                         513,451       442,687   
                                                               
Operating income                                 331,717         321,966
                                                               
Interest income, net                             36              114
                                                               
Other expense                                   (2,072    )    (1,476    )
                                                               
Income before provision for income taxes         329,681         320,604
                                                               
Provision for income taxes                      108,300       105,621   
                                                               
Net income                                     $ 221,381      $ 214,983   
                                                               
Net income per share
                                                               
Basic                                          $ 0.78         $ 0.74      
                                                               
Diluted                                        $ 0.77         $ 0.73      
                                                               
Shares used in computing
net income per share
                                                               
Basic                                           284,569       289,778   
                                                               
Diluted                                         288,497       296,068   
                                                                           

                                                             
COACH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
At September 29, 2012, June 30, 2012 and October 1, 2011
(in thousands)
(unaudited)
                                                                   
                                     September 29,   June 30,      October 1,
                                       2012          2012         2011
ASSETS
                                                                   
Cash, cash equivalents and           $  760,755      $ 917,215     $ 847,975
short term investments
Receivables                             178,307        174,462       153,061
Inventories                             598,128        504,490       519,586
Other current assets                   231,397       208,361      168,526
                                                                   
Total current assets                    1,768,587      1,804,528     1,689,148
                                                                   
Property and equipment, net             687,475        644,449       586,914
Other noncurrent assets                695,316       655,344      602,016
                                                                   
Total assets                         $  3,151,378    $ 3,104,321   $ 2,878,078
                                                                   
LIABILITIES AND STOCKHOLDERS'
EQUITY
                                                                   
Accounts payable                     $  132,997      $ 155,387     $ 144,244
Accrued liabilities                     575,627        540,398       486,329
Current portion of long-term           22,279        22,375       800
debt
                                                                   
Total current liabilities               730,903        718,160       631,373
                                                                   
Long-term debt                          985            985           23,264
Other liabilities                       425,397        392,245       406,938
                                                                   
Stockholders' equity                   1,994,093     1,992,931    1,816,503
                                                                   
Total liabilities and                $  3,151,378    $ 3,104,321   $ 2,878,078
stockholders' equity

Contact:

Coach
Analysts & Media:
Andrea Shaw Resnick, 212-629-2618
SVP Investor Relations & Corporate Communications