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NEW YORK — Grow, grow, grow: That’s the apparent retail mandate at Michael Kors Holdings Ltd., whether it’s global freestanding stores, shops-in-shop or a new e-commerce site later this year.
This story first appeared in the May 29, 2014 issue of WWD. Subscribe Today.
The company posted double-digit percent gains for profits and revenues in the fourth quarter, driven in part by new retail locations and the conversion of department store doors to shops-in-shop.
The brand plans to maintain its pace of openings and its global expansion in the current fiscal year. On the wholesale side, the company continues to convert department store doors to shops-in-shop for accessories, footwear, women’s wear and men’s wear combined. It ended fiscal 2014 with 1,560 global shops-in-shop, and plans to open 500 in fiscal 2015.
In the U.S., the company expects to open 45 North American stores in fiscal 2015, 10 in Japan. John D. Idol, chairman and chief executive officer, said Kors plans to increase its travel retail stores in airports, where it has 50 sites and can support 75 such locations. In addition, the group will soon disclose plans for opening freestanding men’s stores on a global basis.
Including licensed locations, there were 555 Michael Kors stores worldwide at the end of the fourth quarter.
Idol said the company is on track to launch a new North American e-commerce site this fall. The site is expected to play an important marketing role in building the relationship between the Kors brand and its customers, with the business becoming a “multimillion-dollar platform” over time.
Licensing income will continue to grow, driven by strength in the watch and jewelry segments. Kors ended the fiscal year with 150 watch and jewelry shops-in-shop, and the ceo said there is an opportunity for 500 such shops worldwide. Company executives said Kors is one of the top 10 watch firms, and that jewelry could be 50 to 60 percent of the size of its watch business, making it one of the top three or four jewelry firms over the next three to five years if certain goals are met.
The Kors fragrance and beauty collection, already in North America and some countries in Europe, will be expanded to additional markets in Europe, the Middle East and Latin America during the balance of 2014 and next year in Asia. In January, the brand will introduce a licensed eyewear collection via a new agreement with Luxottica.
Idol said there’s still room to grow the brand, noting that awareness in the U.S. increased to 89 percent in 2014 from 82 percent last year, and that in Europe brand awareness grew to 49 percent from 39 percent a year ago. Brand awareness in Japan is at 32 percent. “We have a tremendous opportunity to further increase brand awareness globally through various marketing channels, including traditional advertising or e-commerce site, social media and public relations events,” the ceo said.
Kors earlier this month held a major event in Shanghai to mark the opening of its flagship there, including the designer’s first-ever visit to China.
For the three months ended March 29, net income rose 59.2 percent to $161 million, or 78 cents a diluted share, from $101.1 million, or 50 cents, a year ago. Total revenues increased 53.6 percent to $917.5 million from $597.2 million, which included a 52.8 percent gain in net sales to $882 million. Included in net sales was a 55.5 percent jump in wholesale net sales to $473.7 million and a 49.7 percent gain in retail net sales to $408.4 million, which was driven by a 26.2 percent increase in comparable-store sales. The balance in revenue was driven by a 79.1 percent spike in licensing income to $35.4 million. Analysts were expecting 68 cents a share on revenues of $816.2 million.
For the year, net income was up 66.4 percent to $661.5 million, or $3.22, on a total revenue rise of 51.8 percent to $3.31 billion.
The company projected diluted earnings per share at between 78 cents and 80 cents for the first quarter, on a total revenue forecast range of $840 million to $850 million and a comps increase of 20 percent. For fiscal 2015, the company guided diluted EPS at between $3.85 and $3.91, on a total revenue range of $4 billion to $4.1 billion and a comps increase in the high teens.
Shares of Michael Kors rose 1.3 percent to close at $97.01 in Big Board trading.