Coach Raises Second Quarter Earnings Expectations to At Least $0.65, Up From $0.61 Estimate; Results Driven by 31% Sales Gain and Continued Margin Improvement.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 8, 2003

Coach, Inc., (NYSE: COH), a leading marketer of modern classic American accessories announced that it is raising its earnings expectations for the second fiscal quarter ended December 28, 2002 to at least $0.65 per share.

This level is above the company's guidance of $0.61 announced during the October 22, 2002 conference call, as well as analysts' current consensus estimate of $0.62.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc. said, "I'm delighted with the continued strength of our results. Our robust holiday sales reflect the vibrancy of the Coach brand and the relevancy of our product offering to today's woman in all markets and bodes well for the future. In addition, our improvement in profitability was a result of both gross margin expansion and the further leveraging of our expense base. We now expect to report earnings per diluted share of at least $0.65 for our second fiscal quarter as compared to $0.49 reported last year and our original guidance of $0.61."

- Sales for the second fiscal quarter ended December 28, 2002 increased 30.9% to $308.5 million from $235.8 million for the comparable quarter of the prior year. This sales increase exceeds the company's estimate provided during the October conference call of $290 million.

- Direct-to-consumer sales increased 19.3% to $191.5 million from $160.5 million last year. Comparable store sales for the quarter rose 12.7% with retail stores up 18.1% and factory store sales up 5.8%.

- Indirect sales rose 55.5% to $117.1 million from $75.3 million in the same period last year. Significant sales growth in Japan - from both new store openings and comparable location increases - and continued momentum in US department stores were the primary drivers of these results.

Mr. Frankfort added, "We experienced very strong holiday sales across all channels of our business. This strength reflects increased consumer demand for our product across virtually all women's categories from handbags and small leathergoods to newer and expanded categories such as footwear, hats and scarves."

"We're also pleased with the double-digit increases in comparable location sales in Japan this quarter and the sales of our new Ginza flagship store," said Mr. Frankfort. "Given the Japanese consumer's sustained demand for fine accessories and enthusiasm for our new product offering, Coach is well positioned for continued market share growth in Japan."

Results for the second fiscal quarter, which ended on December 28, 2002, are expected to be reported before the opening of the market on January 22, 2003 and to be discussed in a management-sponsored conference call and simultaneous webcast at 8:30 a.m. (EST) that day. Interested parties may listen to the webcast by accessing www.coach.com/investors on the Internet or dialing into 1-888-455-0032 and asking for the Coach earnings call led by Andrea Shaw Resnick, VP of Investor Relations. A telephone replay will be available starting at 12:00 noon that day, for a period of five business days. The number to call is 1-800-294-6360. A webcast replay of the earnings conference call will also be available for five business days on the Coach website.

All results described above are based on preliminary, unaudited sales.

Coach, with headquarters in New York, is a leading American marketer of fine accessories and gifts for women and men, including handbags, women's and men's small leathergoods, business cases, weekend and travel accessories, footwear, watches, outerwear, jewelry, sunwear, furniture and related accessories. Coach is sold worldwide through Coach stores, select department stores and specialty stores, through the Coach catalogue in the U.S. by calling 1-800-223-8647 and through Coach's website at www.coach.com. Coach's shares are traded on The New York Stock Exchange under the symbol COH.

This press release contains forward-looking statements based on management's current expectations. These statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "intend," "estimate," "are positioned to," "continue," "project," "guidance," "forecast," "anticipated," or comparable terms. Future results may differ materially from management's current expectations, based upon risks and uncertainties such as expected economic trends, the ability to anticipate consumer preferences, the ability to control costs, etc. Please refer to Coach's latest Annual Report on Form 10-K for a complete list of risk factors.