(Adds analyst comment, market share data, byline)
By Phil Wahba
April 29 (Reuters) - Coach Inc reported a sharp drop in North American sales on Tuesday as the upscale leather goods maker continued to lose ground to fast-growing rivals in the U.S. handbags market.
Sales at North American stores open at least a year fell for the fourth quarter in a row, tumbling 21 percent, far worse that the 14.8 percent decline analysts surveyed by Reuters expected, and a deeper drop than in preceding periods.
Shares were down 3.3 percent at $48.76 in premarket trading.
The New York company, known for its Poppy handbags, has struggled to keep up with its competitors, particularly Kate Spade & Co and Michael Kors Holdings Ltd, whose handbags were finding greater favor with customers.
Chief Executive Victor Luis, who took the reins in January, said Coach's business in North America, where it gets 70 percent of sales, "remained challenging" and the number of customer visits had fallen "sharply."
Michael Kors' share of the U.S. handbag market rose to 7 percent from 4.5 percent between 2011 and 2012, according to Euromonitor International. Coach's share shrank to 17.5 percent from 19 percent in the same period.
Meanwhile, the overall North American handbag market grew at a "high single-digit percentage rate in the first three months of 2014," Luis said.
Relief may come in September, when the first collection designed under new creative director, Stuart Vevers, hits stores. The collection received positive reviews in the fashion press, though one analyst said that was no guarantee of success.
"Good feedback from media is not the same as customers coming in the doors - they're having trouble bringing in younger customers," said Edward Jones analyst Brian Yarbrough.
Overall revenue fell 7.4 percent to $1.1 billion in the third quarter ended March 29, with sales gains overseas, including a 25 percent jump in China, limiting some of the decline in North America.
Quarterly net income fell to $190.7 million, or 68 cents per share, from $238.9 million, or 84 cents per share, a year earlier.
(Reporting by Phil Wahba in New York; Editing by Sofina Mirza-Reid and Bernadette Baum)
- Consumer Discretionary
- Investment & Company Information
- Coach Inc
- North American
- Michael Kors