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.
@pantone announced their Color of the Year 2018: Ultra Violet. Nearly 20 months after the musician Prince’s death, fashion is having a purple moment. Varying shades of purple appeared on spring or fall runways, from @christopherkane to @calvinklein. @gucci’s Alessandro Michele bathed his fall runway in ultra violet-colored light at one point. Pantone 18-3838 is meant to “push the boundaries of what inspires us to look upward and outward to the future.” #wwdnews #wwdfashion (📷: @kukukuba)
@badgalriri’s @fentybeauty launch in September was a massive success on social media, powering $72.9 million of earned media value, according to Tribe Dynamics. The brand’s foundation offering sparked conversations about diversity in beauty, launching the growth of emerging influencers and propelling the brand’s support on social media. Today, #fentybeauty won Launch of the Year at the WWD #BeautyIncAwards. (📷: Chema Moya/EPE-EFE)
@marianna_hewitt has become one of the most influential content creators in the beauty space, with almost 800,000 Instagram followers and a newly launched skin care line called @SummerFridays. Today, she was awarded Influencer of the Year at the WWD #BeautyIncAwards. (📸: @sophiachabbott )
As shopping behaviors evolve, the retail experience must follow. Head over to retail experts @colliersinternational’s Knowledge Leader series to read more about the shift in our shopping era. #colliersretail #lovecolliers
@prada opened a pop-up club, called Prada Double Club, in collaboration with German artist Cartsen Höller at @artbasel Miami. Last night, guests – including @youngparis, @ritaora and even Miuccia Prada herself – gathered in a former ice factory where the pop-up is housed for a performance from @wyclefjean. Go to WWD.com for full coverage on all the exhibits, parties and more at #ArtBaselMiami. #wwdeye (📷: @lexieblacklock)
@louboutinworld and @disney are making magic once again, creating a set of shoe designs for the release of “Star Wars: The Last Jedi.” Louboutin designed a pair of shoes for each of the film’s four female leads: Rey (@daisyridrey), Vice Admiral Amilyn Holdo (@lauradern), Captain Phasma (Gwendoline Christie) and Rose Tico (@kellymarietran). The shoes will debut on Saturday at the L.A. premiere of the latest episode. #wwdfashion
Today at the #BeautyIncAwards 2017, WWD will be joined by beauty leaders from around the world as we honor this year's most innovative people, products, brands and places. Follow along here and on Twitter for live coverage from the exclusive event. #wwdsummits (📷: @elizaflorendo)
Exclusive: Beauty superinfluencer @marianna_hewitt is launching her first-ever skin care brand with her business partner @laurengores. Their new line Summer Fridays, which will be sold exclusively at summerfridays.com starting in January, is launching with just one product – a hydrating cream Jet Lag Mask. “We wanted to focus on one product that was amazing,” said Hewitt. Read the full interview on WWD.com. Link in bio. #wwdbeauty #wwdnews
Michelin star-rated chef PJ Calapa marks his first solo endeavor with today’s opening of @scampinyc –– the new Southern Italian restaurant located in Manhattans’ Flatiron District. The upscale yet welcoming environment matches the menu, which includes two types of scampi: traditional Italian langoustines in butter and the Americanized version with shrimp over pasta 🍤 - pictured here. #wwdeye (📷: George Chinsee)