Coach Gains as Profit Tops Estimates on Holiday Sales

Coach Inc. (COH), the largest U.S. luxury handbag maker, climbed the most in almost two months after reporting quarterly profit that topped analysts’ estimates, driven by holiday sales in North America.

Coach rose 5.8 percent to $67.97 in New York, the biggest gain since Nov. 28. The shares advanced 10 percent last year.

Net income in the fiscal second quarter ended Dec. 31 rose 15 percent to $347.5 million, or $1.18 a share, from $303.4 million, or $1, a year earlier, New York-based Coach said today in a statement. Analysts projected $1.15 a share, the average of 24 estimates compiled by Bloomberg.

Shoppers bought $428 Madison satchels, $298 Kristin shoulder bags and $198 Poppy totes after consumer confidence rose to an eight-month high in December and financial markets stabilized. Sales at North American stores open at least a year climbed 8.8 percent, exceeding the 6 percent estimate of Christine Chen, an analyst for Needham & Co., and the 5 percent projection of David Schick at Stifel Nicolaus & Co.

“It was an absolute solid quarter,” Chen said in an interview. Coach isn’t as exposed to Europe as competitors such as Tiffany & Co., which helped it surpass estimates, said San Francisco-based Chen, who recommends buying Coach shares.

Revenue advanced 15 percent to $1.45 billion, topping the $1.43 billion average estimate of 21 analysts.

Chief Executive Officer Lew Frankfort said the company’s men’s business is projected to double to $400 million in 2012.

Tiffany fell the most in more than three years on Jan. 10 after reducing its annual earnings forecast because of slowing sales in Europe, where the sovereign debt crisis prompted consumers to curb spending.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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