New York—Michael Kors’ Fall 2012 runway show isn’t until tomorrow, but the brand was the talk of Wall Street today as his company, Michael Kors Holding Ltd., reported a robust third quarter sales.
In fact, shares of his recently public company (KORS.N) leaped more than 22% in early trading today, making it the biggest gainer on the stock exchange.
No wonder. For the quarter ended Dec. 31, the company posted a profit of $39 million, or 20 cents a share, compared with $27.8 million, or 16 cents a share, a year ago.
Total revenue rose 68% to $373.6 million driven by sales increases in its leathergoods, such as handbags and small leather goods, and watches.
Retail net sales increased 82.8% to $199.4 million, aided by 75 new store openings in the last year as well as a 38% increase in comparable store sales. Wholesale net sales increased 55.0% to $154.6 million and royalty revenue increased 44.0% to $19.6 million. Gross margin increases to 59.4% from 57% a year ago.
Sales Drivers: Handbags, SLGs, Watches
“Licensing revenue grew 44% due to strong sales of our products during the holiday season led by the Michael Kors watch line, (a license with Fossil)” said John Idol, chairman.
Since making its debut on the New York Stock Exchange in December with its IPO shares priced at $20 a share, the stock has continued to rise, closing at $33.61 on Monday.
“We are uniquely positioned to continue to build our global, luxury lifestyle brand and we have tremendous opportunity for growth.” Idol said. “We are pleased with our third quarter sales and earnings growth. Our results were driven by strong performance across each of our retail, wholesale and licensing segments. Our North American comparable store sales growth was 38.0% over the third quarter of last year. These results reflect the strong demand for the Michael Kors luxury brand, our exciting assortment of fashion merchandise and our exceptional jet-set in-store experience.”
As of Dec. 31, Michael Kors operated 231 retail stores, including concessions, up from 156 retail stores a year ago. The company said at the time of its listing that it intended to more than double its store count in North America, and have about 100 stores in both Europe and Japan.
Looking ahead, Michael Kors expects its fiscal year revenue to reach between $1.27 billion to $1.28 billion, up from the $757.8 million a year prior. In its fourth quarter, revenue should range between $350 to $355 million, with 10 to 12 cents per share. Analysts’ average estimate expects 11 cents.
“I think it’s a conservative guidance and sets them up for a beat in the fourth quarter,” Wedbush Securities analyst Corinna Freedman told Reuters.”The growth is coming from new markets like Europe and Japan.”
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