• by Sarah Mahoney  @mahoney_sarah, August 10, 2016

In a sign that its five-year turnaround plan is starting to appeal to luxury shoppers, Coach says its fourth-quarter sales gained 15%, with North American sales of the Coach brand climbing 9%. It also says it’s closing about 25% of its department-store locations, hoping that will add back some of its cachet.

Observers say that’s all good news for the handbag company, and its executives claim it signals an important shift in perception back to a luxury lifestyle name.

“We elevated brand perception globally,” says CEO Victor Luis in its announcement. Despite volatility in tourist spending in key markets, he says direct sales in North America gained “while we continued to implement strategic actions to … streamline our distribution in the department store channel.” And internationally, the company saw double-digit gains in China and Europe.

He says marketing will increasingly amplify that higher-fashion message. “We truly joined the fashion conversation, through our first runway shows, elevating the perception of the Coach brand.”

For the fiscal quarter, sales rose to $1.15 billion. (Sales in its stores, on a comparable store basis, gained 2%.) Net income for the quarter climbed to $82 million, from $12 million in the same period last year. Sales in department stores in North America dropped in the mid-teens, reflecting its shift in strategy.

Investors have been keeping a close eye on the company as it moves into fiscal 2017, “marking the third year of Coach’s five-year transformation process,” writes Dave Weiner, an analyst who follows Coach for Deutsche Bank, acknowledging that the brand is gaining ground. “During the first two years, Coach was implementing an ‘invest & reset’ strategy, but FY17 is supposed to mark the return to ‘sustainable growth.’”

In its results, Coach forecast sales gains in the low-to-middle digits, slightly below what observers were expecting. “We believe that continuing to surpass market expectations will be more difficult,” Weiner writes.