Michael Kors Q2 Stunner: Profits Up 49%

Michael Kors

Accessories played a prominent role in Kors’ success this quarter

Hong Kong—Some major luxury brands have been talking—and experiencing—slowdowns in recent quarters. Not Michael Kors. Today, the U.S. designer brand once again proved its worth as one of the darlings of Wall Street: its profits jumped 49% and sales were up by nearly 40%.

For its second quarter ended Sept. 28, Kors posted a profit of $145.8 million, or 71 cents a share, compared with $97.8 million, or 49 cents a share, in the year-ago quarter. That beat analysts’ average estimate for 68 cents a share.

Total net revenue was up 38.9% to $707.4 million, just below analysts’ estimate for $725.91 million. At its own stores, the company posted comparable store sales up 22.9%, marking the 30th consecutive quarter of increases.

“Our strong financial results in the second quarter underscore Michael Kors’ expanding brand awareness and global presence,” said CEO John Idol. “Overall, we continue to see great demand for Michael Kors as a global luxury lifestyle brand.”

Licensing Revenue Up 65.4%

The report send shares of Michael Kors Holdings in a rally, up 6% (giving the brand a 55% gain for the year).

Sales in North America grew 31% to $618.3 million while comparable store sales increased 21%. Most of the growth was attributed to accessories, especially handbags, footwear and watches.

In Europe, sales increased 101% to $114 million with comparable store sales growing 45%. Idol told analysts on a conference call that the company expects to do even more in Europe and that it views its top competitors there to be “two or three of the very largest global Italian and French luxurygoods players.”

The company added 83 new stores in the past year for a total of 352 Kors-operated shops.

Licensing partners operate an additional 125 Kors stores and concessions. Licensing revenue was up 65.4% to $32.9 million largely driven by watches and eyewear.

Retail net sales increased 46.8% to $355.6 million. Wholesale net sales rose 39.9% to $351.9 million.

Looking ahead, the company forecast full-year fiscal revenue between $2.9 billion and $3 billion, with comp store sales increasing about 20%. Per-share earnings would range between $2.77 to $2.81, up from the previous estimate of $2.67 to $2.69 a share with revenues between $2.8 billion and $2.9 billion.

Analysts’ consensus expects earnings of $2.78 a share with sales of $2.99 billion.

 

 

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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com