While I hate to contradict Preston, the coupon is working on sales and clearance items.

If you just look at the shopping cart contents on the left after you apply the coupon, the warning "this coupon does not apply to sale or clearance items" appears under the item(s), but the 10% discount is shown on the right side just below the sub total. 

I have placed two orders this way with only sales and clearance items in my cart and the discount has been taken off correctly.