Coach Inc. (NYSE: COH - News) is making a big move into China as its U.S. and Japanese operations face more difficult growth trends. COH saw double digit revenue growth in its Chinese retail stores in the fiscal fourth quarter.

Coach is a specialty retailer which used to be known for its solid leather handbags but has since expanded into other accessories, including footwear, watches, outerwear, scarves, sunwear, jewelry, and fragrances.

Coach operates its own retail stores as well as distributes through certain department and specialty stores as well as its own web site.

Sales Jumped 22% in the Fiscal Fourth Quarter

Coach reported its fiscal fourth quarter results on Aug 3 and beat the Zacks Consensus by 14.3%. Earnings per share were 64 cents compared to the consensus of 56 cents.

Sales continued to be hot, jumping 22% to $951 million from $778 million a year ago. The death of the consumer has been greatly exaggerated.

North American same store sales climbed 6.3% and Japan rose 6%.

But China is where the big growth story is. China saw same store sales rise at a double digit rate (the company didn't break out exactly what that rate was).

The company also recently opened up its first flagship store in China in Shanghai. It has 41 locations in the country and expects to open 30 new locations this year alone.

The company also opened its first stand-alone Men's store in Japan in the quarter and now has two locations there.

Growth Expected to Continue

Coach never gives guidance but the analysts like what they heard out of the fiscal fourth quarter.

Estimates are up for the full year ending in July 2011 by 11 cents to $2.65 in the last month as 15 out of 17 estimates moved higher in that period.

Analysts now expect earnings growth of 13.6%.

Similarly, the bullish story is expected to continue into the next fiscal year, with another 11.4% earnings growth forecast.

Income

Coach pays a dividend with a current yield of 1.6%. Not many of its peers pay a dividend so it's a nice reward for shareholders.

Coach is a Zacks #2 Rank (buy) stock.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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