Handbag designer Coach (COH) revealed on Tuesday a 21% increase in third-quarter profit on strong demand in the U.S. and China, leading the company to lift its dividend by 33%.
During the quarter, direct-to-consumer sales were up 18% to $984 million from $837 million a year ago, while comparable-store sales in North America increased 6.7%. In China, sales jumped 60% on a constant-currency basis.
Revenue for the three months ended March 31 was up 17% to $1.11 billion from $951 million in 2011, virtually matching the Street’s view. Indirect sales were up 10% to $125 million from $114 million in 2011.
Coach CEO Lew Frankfort said the company was pleased with the strong top and bottom-line performance and the expansion of its operating margin, which was 30.4% from 29.4% last year.
“Our results demonstrated the brand’s resonance across channels, categories and geographies and reflected the effectiveness of our new pricing and promotional strategies in our North American factory business,” he said.
The improvements led the company’s board of directors to authorize a 33% increase in its dividend to an annual rate of $1.20 a share from 90 cents, starting with the quarterly dividend being paid in July.
The New York-based luxury fashion company reported net income of $225 million, or 77 cents a share, compared with a year-earlier $186 million, or 62 cents.
Excluding one-time tax adjustments, Coach earned 62 cents, below average analyst estimates of 75 cents in a Thomson Reuters poll.