Bonnie

NEW YORK (April 21, 2009)—Coach, Inc. (NYSE: COH) today reported sales of $740 million for its third fiscal quarter ended March 28, 2009, compared with $745 million reported in the same period of the prior year, a decrease of 1 percent. The company also announced that its board of directors has voted to initiate a cash dividend at an annual rate of $0.30 per share. The first quarterly payment of $0.075 per share will be paid on June 29.

Lew Frankfort, chairman and CEO, said in a statement, “The announcement today of the initiation of a dividend reflects our financial strength and our confidence in Coach’s business outlook. With a business model that generates significant cash flow and with virtually no debt, we are in a position to take advantage of profitable growth opportunities, while continuing to return capital to shareholders.”

During the quarter the company recorded three one-time charges; expenses related to the reduction of corporate staffing levels in the U.S., the closure of four North American retail stores and the closure of the company’s sample-making facility in Italy. These actions increased the company’s SG&A expenses by $13 million in the period and negatively impacted earnings by $8 million after tax. Combined with other key measures previously implemented, such as the elimination of merit-based salary increases and a hiring freeze outside of critical growth areas, the company now expects to capture over $50 million in total pre-tax savings next fiscal year.

“We were pleased to generate top line results that were essentially even with prior year and encouraged by the stabilization of our comparable store sales to pre-Christmas levels in North America,” Frankfort staid. “Importantly, we enhanced the vibrancy of our franchise by providing our consumers with innovative, relevant product at a compelling value without going on sale in our retail stores.”

For the quarter, before one-time items, operating income totaled $199 million, down 23 percent from the $257 million reported in the comparable year ago period, while operating margin was 26.9 percent versus 34.5 percent reported for the prior year. During the quarter, gross profit declined 6 percent to $525 million from $558 million a year ago.

Direct-to-consumer sales rose 9 percent to $634 million in the third quarter from $582 million last year. North American comparable store sales for the quarter declined 4.2 percent. In Japan, sales rose 1 percent on a constant-currency basis, while dollar sales rose 14 percent, reflecting the stronger yen year-over-year. China sales remained robust, as retail sales continued to comp at a double-digit rate.

During the third quarter of fiscal 2009, the company opened two retail stores and closed two others, while opening three factory stores in North America, bringing the total to 324 retail stores and 109 factory stores as of March 28. In addition, one retail store and one factory store were expanded. In Japan, Coach opened one factory store, bringing the total number of locations in Japan to 161 at the end of the quarter.

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