New York—Once again Michael Kors Holdings Ltd. has impressed Wall Street, reporting third quarter earnings today that blew past analysts’ estimates.
For the quarter ended Dec. 29, the apparel and accessories company posted net profit that rose four-fold to $130 million, or 64 cents a share, up from $32 million for 20 cents a share, in the year ago period. Analysts’ average estimate expected only 41 cents a share.
Net revenue leaped 70% to $636.8 million, again well ahead of the $540.3 million analysts expected. Gross margin widened to 60.2% from 59.4% in the quarter.
Comparable store sales were up 41% in North America, while comp sales at the company’s stores in financially-strapped Europe rose 58%.
Licensing revenue increased 52% year-over-year due to the continued strong sales of the brand’s fashion watches.
The company attributed its impressive gains to conversion of its department store locations into branded shop-in-shops that drew in more customers and generated higher sales.
‘Ideally Positioned within the Global Luxury Lifestyle Market’
Today’s results reflect “sustained brand momentum as the global recognition and appeal for the Michael Kors luxury brand continued to expand,” John Idol, chief executive. “We were extremely pleased with the holiday season as Michael Kors’ brand strength, innovative fashion design and jet-set in-store experience drove strong sales and earnings.”
Commenting on the results to Reuters, Paul Swinand, analyst at Morningstar, said, “Obviously Michael Kors is gaining market share from Coach, but its not only Coach…it is also the little guys that are getting squeezed in a highly competitive market.”
Kors raised its full year earnings forecast to between $1.80 to $1.82 a share, up from its previous range of $1.48 to $1.50 a share. Also increased, the company’s full year sales forecast to $2.1 billion, up from $1.86 billion to $1.96 billion in its previous forecast. Comp store sales are now estimated to be in the “mid-thirty” percent, ahead of a 30% increase predicted earlier.
Analysts’ consensus had estimated full year earnings of $1.57 a share on sales of $2.01 billion.
“We believe that the Michael Kors brand is ideally positioned within the global luxury lifestyle market and we look forward to delivering on our long-term objectives,” Idol added.
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