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Coach's fiscal Q3 earnings per share misses expectations

Coach Inc.'s fiscal third-quarter earnings per share slightly missed analysts' estimates as the high-end accessories maker continues to reduce its exposure to promotions and its wholesale business.

The handbag maker said May 2 that it generated diluted or GAAP earnings per share of 43 cents for the fiscal third quarter ended April 1, missing the consensus mean of analysts' estimates of consolidated GAAP EPS of 44 cents, according to data provided by S&P Capital IQ.

The figure was up 7% over the retailer's earnings of 40 cents per share for the fiscal third quarter of 2016.

Meanwhile, net income rose 8.6% to $122.2 million from $112.5 million a year ago.

The company's CEO, Victor Luis, said the company was able to achieve earnings growth even as it reduces its wholesale business in North America.

Operating income grew 12.5% to $151.1 million from $134.3 million for the same period a year prior.

The company's net sales, however, decreased 3.7% to $995.2 million from $1.03 billion for the same period a year ago.

Third-quarter comparable sales were up 3% for the Coach brand in North America. That contrasts with comparable sales that were flat in North America for the core Coach brand in the third quarter a year ago.

Sales for the Coach brand in North America decreased 5% on a reported and constant currency basis to $474 million from $499 million for the same period a year prior, with comparable sales up 3%.

Internationally, sales for the Coach brand declined 4% on a reported basis, including foreign exchange pressure, to $430 million from $448 million for the same period a year ago.

Stuart Weitzman, another brand in Coach's portfolio, saw its sales increase 1% to $80 million from $79 million for the same period a year prior.

The company maintained its full-year guidance outlined in January, it said. Revenue is expected to grow in the low-single digits in fiscal 2017, which includes the impact of currency and the decision to reduce promotions and vacate 25% of the stores tied to its North American wholesale business.

The company also expects double-digit increases in net income and in earnings per diluted share.