New York City -- Coach reported Tuesday that net income for the quarter ended Jan. 1 rose a better-than-expected 26% to $303.4 million on strong sales, compared with $240.1 million in the year-ago period.
The company credited a rebound in U.S. luxury spending, as well as soaring holiday sales in China for the strong performance.
Sales leaped 18.7% to $1.26 billion, boosted by a same-store sales increase of 12.6% in North America.
On average, Wall Street expected revenue of $1.21 billion.
In China, where Coach is still new to the market but now operates 52 stores, sales rose by double digits on a percentage basis. Revenue in Japan rose 8% in dollars, helped by a stronger yen.
Coach has positioned itself in the "affordable luxury" segment in the past two years as shoppers have cut back on the most expensive items. It has lowered average prices on its handbags by about 10% by introducing a lineup of handbags under $300 and by expanding its outlet stores.
Coach also said it will buy back up to $1.5 billion of its outstanding shares by June 30, 2013.
The company had 347l stores and 129 factory outlets at the end of the quarter in North America. In Japan, Coach had a total to 171 retail locations and in China, 52.