Coach warns on store traffic, profit; stock falls

By Aarthi Sivaraman

NEW YORK (Reuters) - High-end handbag and accessory maker Coach Inc (COH.N: Quote, Profile, Research, Stock Buzz) warned on Tuesday of weak traffic in its U.S. stores and forecast earnings below Wall Street estimates, pushing its shares down 12 percent.

"We are taking a cautious approach because of the very recent trends in traffic," Chief Executive Lew Frankfort told Reuters in an interview.

"We think it is prudent considering the overall retail landscape," he said, referring to tight consumer spending, exacerbated by housing market worries and high energy costs.

The warning came even as the company reported higher profit for the fiscal first quarter ended September 29.

Coach said it expects to earn 68 cents per share on sales of about $970 million in the current quarter. The forecast fell short of the average Wall Street estimate of 70 cents a share on sales of $983.6 million.

The company also said it expects sales at U.S. retail stores open at least a year to rise at a low-single-digit percentage rate for the current quarter. For the second half of its fiscal year, it forecast an increase in the mid-single-digit range.

The New York-based company stood by its fiscal 2008 profit forecast of at least $2.06 per share. It expects sales of $3.17 billion, up slightly from its July forecast of $3.16 billion.

Analysts expect $2.08 per share on sales of $3.19 billion, according to Reuters Estimates.