Handbag maker Coach's profit beats on Stuart Weitzman buy

Handbag maker Coach Inc reported better-than-expected quarterly profit and sales, helped by the acquisition of luxury shoe brand Stuart Weitzman Holdings LLC and some recovery in demand in North America, its biggest market.

Shares of the maker of Poppy handbags rose about 6 percent in premarket trading on Tuesday.

Coach, which is facing fierce competition from newer entrants such as Michael Kors Holdings Ltd, Kate Spade & Co and Tory Burch LLC, is trying to revive sales by renovating its stores, refreshing styles and expanding its offerings.

Coach's North America same-store sales fell 19 percent in the fourth quarter, the smallest decline in a year. Analysts on average had expected a 20.8 percent drop, according to research firm Consensus Metrix.

The region accounts for more than half of the company's total sales.

Coach also hired former Mulberry executive Stuart Vevers as creative director to bring in newer styles.

The company's new bags featuring pet dogs of celebrities such as Lady Gaga, Miranda Kerr and Ariana Grande promise to generate a buzz, Topeka Capital Markets analysts wrote in a note last week.

Coach's net income declined to $11.7 million, or 4 cents per share, in the quarter ended June 27 from $75.2 million, or 27 cents per share, a year earlier.

Excluding items, the company earned 31 cents per share.

Revenue fell nearly 12 percent to $1 billion.

Stuart Weitzman, which Coach bought in May from private equity firm Sycamore Partners in a deal valued at $574 million, contributed $43 million to revenue.

Analysts on average had expected a profit of 29 cents per share and revenue of $973 million, according to Thomson Reuters I/B/E/S.

Coach's shares were trading at $32.35 before the bell. Up to Monday's close, the stock had fallen 19 percent this year.