Luxury spending alive and well, Coach stock up

23rd April 2013 No Comments

stocks upDuring rough economic times, luxury items often see a stern dip in sales, and we have definitely seen that over the past few years. While we’re not sure exactly how much it means to the larger economic picture, luxury spending has started to tick upwards, as the earnings reports of companies like Coach can attest to.

Coach, the manufacturer and designer of luxury handbags that you are most likely to see on any one of a number of “Real Housewives of Wherever” shows, has seen overall revenue go up by a stout 7% in the third fiscal quarter. It was an unexpected, but pleasant development for the longtime popular brand in accessories.

Coach’s CEO, Lew Frankfort, expressed pleasure, if not surprise, at the results. “We’re pleased with…the progress we’re making toward out transformation to a global lifestyle brand, anchored in accessories,” he said in a comment.

Although sales internationally are up by 6% (and 40% in China alone!), it’s not just abroad that Coach is cleaning up, as sales are up by 7% in North America, too. As the report was announced, shareholders also got good news in the form of an increase in dividends, which will increase by 13%, to a new total of $1.35 per share.

The news helped to increase the price of shares by 10% on Tuesday, but the benefits were not limited to just Coach, as other luxury companies saw a trickle-down effect that led to increases for them, as well.

For instance, Michael Kors was up by nearly 4%, and both Vera Bradley and Ralph Lauren were up by over 2% each after Coach’s earnings increase lent some optimisim to a market that many had been down on in recent months. The worldwide growth of Coach has definitely lent some optimism to designers like Kors, Bradley, and many others that should be interesting to follow in the coming months.

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