The Michael Kors juggernaut shows no signs of slowing — and it plans to ramp up retail and e-commerce to keep it rolling.
Shares of Michael Kors Holdings Ltd. jumped 8.8 percent Tuesday following the firm’s report of a surge in third-quarter profits and its increase in full-year guidance expectations.
For the fourth quarter, the company guided diluted earnings per share at between 32 cents and 34 cents, on a total revenue range of $515 million to $525 million and a comps increase of low to mid-20 percent.
For the full year, the company raised its diluted EPS forecast to between $1.80 and $1.82, on total revenues of $2.1 billion and a mid-30 percent comps gain. That’s up from earlier projections of between $1.48 and $1.50 on a revenue forecast of between $1.86 billion and $1.96 billion in November, when the company posted second-quarter results. RELATED CONTENT: Click Here for More Earnings Coverage >>
John Idol, chairman and chief executive officer, said in a conference call to Wall Street analysts that more doors, whether through new stores or the increase of sales via the ongoing conversion of department store doors to shops-in-shop, is part of the firm’s blueprint for growth. That’s in addition to plans for bringing in-house its North American e-commerce business in February 2014 so it can create an omnichannel experience for customers, whether in-store or online.
Neiman Marcus has been operating the Kors Web site, and the company will begin the transition process. “In the long term, we expect e-commerce to be a multimillion dollar channel opportunity,” Idol told analysts. While the figure sounds extremely low in the booming world of e-commerce, Idol did not provide any further guidance and a spokeswoman declined to elaborate.
For the three months ended Dec. 29, net income was $130 million, or 64 cents a diluted share, which quadrupled from $32 million, or 20 cents, last year. Total revenues rose 70.4 percent to $636.8 million from $373.6 million. Revenues comprised a 71.5 percent gain in net sales to $606.9 million and a 52.1 percent increase in licensing revenue to $29.8 million. By segment, its retail sales rose 67 percent to $333 million, as comparable store-sales rose 41 percent on a global basis.
By geography, North American revenues rose 67 percent to $573 million, with comps up 41 percent, representing the 27th consecutive quarter of comp-store growth in the region. European revenues in the period rose 112 percent to $58 million, with comps rising 58 percent. In Japan revenues rose 103 percent to $6 million, while comps rose 11 percent.
Idol said gross margin expanded “80 basis points to 60.2 percent for the quarter, driven primarily by lower markdowns as our luxury products continue to generate strong sell-throughs.”
The ceo also said the number-one driver of comps during the holiday season was “small leather goods,” with handbags showing strong acceleration in the quarter, as well as strength in the watch business driving licensing income.
Also showing strong performance was the company’s new jewelry business, of which Idol said “we think we’re at the very beginning stages of what could develop into a significant business for us globally.”
For the nine months, income rose three-and-a-half times to $296.5 million, or 64 cents a diluted share, on a 71.8 percent revenue gain to $1.58 billion.
Shares of Michael Kors closed at $62 in trading on the Big Board.
The company said it entered into a joint venture agreement with Exclusive Brands International to create MK Panama Holdings, which will enable Kors to expand its retail and wholesale presence in Central and South America, as well as the Caribbean.
Idol told analysts the company is also “thoughtfully expanding our men’s wear collection in both our retail and wholesale channels and see men’s leather as a significant opportunity for us over the long term.”
A new store lease in New York’s SoHo is slightly larger in square footage compared with others. Idol said that’s part of a larger review of 10 locations around the world — including New York and London. The larger format, particularly at the SoHo site, allows the company the option of fuller presentations of its different businesses, as well as to test a growing men’s collection. In addition, the SoHo store will feature a floor dedicated to women’s ready-to-wear, Idol said.
At the end of the quarter, the company operated 297 retail stores, including concessions, versus 231 retail stores, including concessions, a year ago. Including licensed locations, there were 388 Michael Kors stores worldwide at the end of the third quarter of fiscal 2013.
Idol said he believes there is a “long-term potential for 400 locations” in North America, as well as 100 retail doors in Europe, including concessions, and 2,000 wholesale doors. He believes the retail network in Japan can support 100 store locations, including concessions.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion