Michael Kors Q4 Profit Triples, Bullish on Future

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Summer at Michael Kors: "Our exceptional jet-set in-store experience"

New York—Boasting a more than triple fourth quarter profit, Michael Kors Holdings Ltd. gave a bullish outlook for the year today, sending shares of the newly public company surging upward in early trading.

For the quarter ended March 31, Michael Kors posted net income of $43.6 million, or 22 cents a share, from $13.6 million, or 10 cents a share, in the year-ago period. Excluding one time items, adjusted profit totaled 21 cents a share.

Total net revenue jumped 58.3% to $380 million. Retail net sales increased 80.3% to $172.2 million thanks to 71 new store launches since the end of 2011. Comparable store sales were up 36.1%.

Wholesale net sales increased 45.5% to $190.7 million and royalty revenue increased 26.9% to $17.1 million.

The results of the company–which had a better-than-expected launch on the New York Stock Exchange in December–handily beat analysts’ average estimate for 16 cents a share on sales of $361 million.

Licensing Growth Led by Watches, Eyewear

“Our results for the quarter were driven by strong performance across each of our retail, wholesale and licensing segments,” said John Idol, chairman/ceo. “Our North American comparable store sales increase was 37.2%, reflecting the strong demand for the Michael Kors luxury brand, our exciting assortment of fashion merchandise and our exceptional jet-set in-store experience.”

Michael Kors Gold Oversized Runway Watch by Fossil

The growth in wholesale cold be attributed to favorable results from transitioning to shop-in-shops in department stores, Idol added, noting that total licensing revenue “grew 26.9% in the quarter due to strong sales of our licensed products led by the Michael Kors watch and eyewear lines.”

Retail sales in Europe increased 122.6% with a 13.6% growth in comparable store sales “in addition to strong performance in our wholesale operations. In Japan, we are cautiously encouraged by our results for this business, which is in the start-up phase,” Idol said.

And the company expects the strong upward trend to continue. It forecast first quarter earnings in the range of 18 to 20 cents with total revenue between $360 million to $370 million along with a comp store gain of 35%. Analysts’ estimate expects earnings of 17 cents on sales of $323.98 million.

For its fiscal full year, Michael Kors gave a bullish guidance: earnings of $1.08 to $1.12 a share on sales of $1.7 billion to $1.8 billion. Even the low end of that forecast is better than what analysts’ consensus expects: 98 cents a share on sales of $1.69 billion.


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