Coach Raises Second Quarter Earnings Expectations to Over $0.85, Up From $0.77-$0.80 Estimate.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 10, 2001

Cites Full Price Policy at Retail

Contributing to Continuing Margin Growth

Coach, Inc., (NYSE: COH), a leading marketer of modern classic American accessories, today announced that it is raising its earnings expectations for the second fiscal quarter ended December 30, 2000, to over $0.85.

This level is significantly above the company's $0.77-$0.80 estimate announced on its October 31, 2000 conference call, as well as the current analysts' consensus estimate of $0.79.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc. said, "As a result of our double-digit sales growth, stable pricing policy and increased operating leverage, I am extremely pleased to announce that we have significantly raised our earnings expectations for the second quarter. We now expect to report earnings per fully diluted share in excess of $0.85. Earnings growth will exceed 30% and prior year per share results were $0.65, based upon the current number of shares outstanding."

Sales for the second fiscal quarter ended December 30, 2000, increased over 10% to $214.2 million, from $194.1 million for the comparable quarter of the prior year. This sales increase was in line with the company's estimate given on its October 31 conference call. Direct-to-consumer sales increased 8% to $145.7 million from $134.8 million last year. Comparable store sales for the quarter rose 2.5%, with retail stores up 1.1% and factory store sales up 4.4%. Mr. Frankfort added, "Those Coach retail stores outside of regions affected by severe weather (the Midwest, Texas and the Southeast) enjoyed a mid-single-digit increase in comparable store sales during the second fiscal quarter. These stores represent approximately 70% of our retail store sales volume."

Wholesale sales rose 15% to $68.4 million from $59.3 million in the same period last year. Results were driven primarily by strong gains in International, highlighted by continued double-digit increases in comparable location sales to Japanese consumers worldwide.

"Our consumers continue to embrace Coach's broader product offering and updated presentation, and recognize the superior quality and value that Coach offers. During this highly promotional retail environment in the United States our gross margins have significantly increased, reflecting the consistent application of our philosophy of a 365-day full price proposition in our retail stores," Mr. Frankfort concluded.

Results for the second fiscal quarter, which ended on December 30, 2000, are expected to be reported after the close of the market on January 22, 2001 and to be discussed in a management-sponsored conference call and simultaneous webcast on January 23, 2001.

All results are based on preliminary, unaudited sales. Earnings for the second quarter will increase more than 30% from the $28.3 million earned in the prior year's second quarter. Earnings per share figures reflect 44.5 million shares outstanding, giving effect to the 8.5 million shares sold in the company's October 2000 initial public offering. Actual shares outstanding prior to the initial public offering were 35.0 million and earnings per share in the prior-year equaled $0.81 using these shares.

Coach, with headquarters in New York, is the leading American marketer of fine accessories and gifts for women and men, including handbags, business cases, furniture, luggage and travel accessories, wallets, footwear, watches, eyewear 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 800-262-2411 or visit 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 current expectations, that involve risks and uncertainties that could cause results of Coach, Inc. to differ materially from management's current expectations. These forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "intend," "estimate," or "continue," or the negative thereof or comparable terminology. Future results will vary from historical results and historical growth is not indicative of future trends, which will depend upon expected economic trends, our ability to anticipate consumer preferences for accessories and fashion trends, our ability to control costs, our store expansion and renovation program, and are subject to risks, including currency fluctuations, and other factors. Please refer to the company's most recent Prospectus for a complete list of risk factors.