DOW JONES NEWSWIRES

Coach Inc.'s (COH) fiscal second-quarter net income slid 14% on weaker sales and profit margins amid a slowing economy that led many other retailers to discount heavily to attract holiday shoppers.

However, the luxury products and accessories designer's chief executive, Lew Frankfort, said Coach has maintained its prices to protect its brand.

For the quarter ended Dec. 27, the company posted net income of $216.9 million, or 67 cents a share, down from $252.3 million, or 69 cents a share, a year earlier.

Coach warned earlier this month that a dismal holiday shopping season would hurt results, cutting its per-share earnings target 10 cents to 67 cents.

Sales, which it reported two weeks ago, slumped 1.8% to $960.3 million. Coach said at the time that its North American same-store sales dropped 13%.

Its gross margin slipped to 72.1% from 75.4%, hurt by deeper discounts in factory store promotions.

Coach again said that it wouldn't give forecasts for the second half or full fiscal year due to continuing economic uncertainty.

To offset continued softness in the North American market and to tap new wealth in emerging markets, Coach bought out its distributors in China and plans to open 50 new locations in that region over the next five years. It also has plans to expand in the U.S., adding 200 stores to bring its total count to 500 as it aims to broaden its market appeal to middle-income shoppers who want to appear affluent.

Shares of Coach closed Tuesday at $15.87. There was no premarket trading.

-By Katherine Wegert, Dow Jones Newswires; 201-938-5400; katherine.wegert@dowjones.com

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