Coach fiscal 3rd-quarter net income rises

NEW YORK -Luxury bag maker Coach Inc. said Tuesday that its profit rose 21 percent, as strong results in China helped offset weaker results in U.S. department stores.

The company also raised its dividend and said it is eliminating in-store coupons at its factory locations. Results beat expectations, but its shares fell more than 2 percent in premarket trading.

New York-based Coach said its net income rose 21 percent to $225 million, or 77 cents per share, for the three months ended March 31 from $186 million, or 62 cents per share, last year. Analysts expected earnings of 75 cents per share.

Revenue rose 17 percent to $1.11 billion from $950.7 million. Analysts expected revenue of $1.1 billion.

The company said sales in China, a growth area for the company, rose nearly 60 percent due to expanded distribution and a double-digit increase in revenue in stores open at least one year.

Sales in U.S. department stores were slightly below year-ago levels, the company said. But revenue in North American Coach stores open at least one year, a key retail metric, rose 6.7 percent.

Coach is also raising its dividend by 33 percent to an annual rate of $1.20. The first quarterly dividend will be pain in July.

As it grows internationally, Coach has been taking more direct control of its overseas business. In January it acquired the domestic retail Coach business in Taiwan, and bought the Singapore domestic retail business earlier in the fiscal year.

Meanwhile, it is changing its pricing strategy at its off-price factory stores, eliminating in-store coupons as part of a new "no math" pricing structure. The company says the new method gives it more flexibility.

Given the strength of our business, we remain confident in our ability to continue to drive sales and earnings at a double-digit pace over our planning horizon," said CEO Lew Frankfort.

Nonetheless, its shares fell $1.77, or 2.4 percent, to $73.35 in premarket trading.