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NEW YORK — Michael Kors Holdings Ltd. on Tuesday posted fourth-quarter results that included a tripling of net income as well as a comparable-store sales growth of 36.1 percent.
This story first appeared in the June 13, 2012 issue of WWD. Subscribe Today.
For the three months ended March 31, the Hong Kong-based firm said income attributable to common shareholders was $43.6 million, or 22 cents a diluted share, up from $13.6 million, or 10 cents, a year ago.
Total revenues for the quarter rose 58.3 percent to $380 million from $240 million. That included a sales gain of 60.2 percent to $362.9 million from $226.5 million. Comparable-store sales rose 36.1 percent, the company said. The balance of revenues was from a 26.9 percent increase in licensing income to $17.1 million from $13.5 million.
By region, North American revenues rose 52 percent to $339 million in the quarter, with Europe up 123 percent to $37 million. Japan, which is still in the start-up phase, saw revenues rise to $4 million in the quarter.
The company grew retail sales by 80 percent to $172 million, helped by the opening of 71 stores since the fourth quarter of last year. In the wholesale segment, sales rose 46 percent to $191 million. The company believes it can have 600 stores globally, 400 in the U.S., 100 in Europe and 100 in Japan. The retail-wholesale mix is 55-45, but could shift to 70-30 over the next three to five years, John Idol, chairman and chief executive officer, told analysts on a conference call.
For the year, income more than doubled to $126.1 million, or 78 cents a diluted share, from $56.9 million, or 40 cents, last year. Total revenues rose 62.1 percent to $1.3 billion from $803.3 million, which included a 63.2 percent gain in sales to $1.24 billion from $757.8 million.
The company expects diluted earnings per share for the first quarter to be between 18 cents and 20 cents, with revenues in the range of $360 million to $370 million.
For fiscal year 2013, the company forecast diluted EPS at between $1.08 and $1.12, on total revenue guidance of $1.7 billion to $1.8 billion.
Shares of Kors rose 7.7 percent, or $2.29, to close at $41.10 in trading Tuesday on the New York Stock Exchange.
Idol opened the call to Wall Street analysts by stating that “product is the most important component of a luxury brand.”
Idol noted that designer Michael Kors and his design team provide the firm with its “unique” advantage, and then emphasized, “While the global economy is seeing mixed results by region, our brand and Michael’s designs are resonating with fashion consumers around the world.”
According to the ceo, “We are pleased that our key strategies have resulted in both revenue and earnings growth across all of our business segments and operating regions. We operate in the growing luxury marketplace, which we believe will continue to contribute to our global expansion.”
Among the strategies are a retail expansion in North America, which also included the conversion of wholesale department store doors into branded shop-in-shops, an expansion of its European presence through retail and wholesale door openings and the development of its business in Japan.
“In our accessories categories, we are seeing similar to or greater comp-store increases, as compared to our retail stores in department stores,” Idol added.
In an interview, the ceo said the firm plans to open 10 to 15 additional retail sites throughout Europe in fiscal year 2013. The lifestyle stores will continue to offer accessories from Michael Kors Collection and Michael Michael Kors, alongside a selection of apparel from Michael Michael Kors.
The firm’s strongest markets in Europe are the U.K., France, Italy, Germany and Spain. “While we do see traffic from global travelers, our stores have strong databases of local clientele as well,” Idol said.
Germany, according to a Boston Consulting Group survey last week, is poised to be a stronger player on the luxury front going forward. Idol said the company in December opened its first store in Düsseldorf, which follows on the opening of its very first store in Germany in Munich in 2010. “We are also searching for locations in Berlin, Frankfurt, Hamburg and Cologne. Similar to our other global markets, we are seeing increased tourist traffic in all major cities in Germany,” Idol said.
There are now 309 Michael Kors stores globally, including concessions in Europe, the Middle East, Asia and North America.
In addition, Idol said social media is playing a key role in the firm’s global strategy, through the translation and geo-targeting of universal content to individual markets as well as the generation of original localized content around an event or initiative within a special region.
“Our social media messaging is varied and comprehensive, ranging from coverage of product, brand news and events, and original video and editorial content, as well as more personal communication from Michael including fan questions and style tips,” Idol said.