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It’s always interesting to keep on eye on how well high-end retailers are doing. Consumers tend to cut back on luxury items during a recession.

Coach (COH), the handbag maker, just reported bleak earnings.

Profit for the quarter ended June 27 fell to $145.8 million, or 45 cents per share, from $213.5 million, or 62 cents per share, a year ago. Excluding one-time items, including tax accounting adjustments and other items, net income totaled 43 cents per share.

Revenue fell less than 1 percent to $777.7 million from $781.5 million last year.

Analysts polled by Thomson Reuters, on average, predicted a profit of 43 cents per share on revenue of $780.4 million. Analyst estimates typically exclude one-time items.

When sales are flat and profits fall, that means that profit margins drop. Running the math, the profit margin is close to 19% which is down from 27% a year ago. Still, Coach has pretty high margins for a retailer.

Posted by edelfenbein at July 28, 2009 9:01 AM