A Michael Kors store.

Michael Kors Holdings Ltd. posted better-than-expected third-quarter results and said it continues to make progress on its Runway 2020 strategic plan.

For the three months ended Dec. 30, the company posted a 19.1 percent decrease in net income to $219.4 million, or $1.42 a diluted share, from $271.3 million, or $1.64, a year ago. On an adjusted basis, diluted EPS was $1.77. Total revenues were up 6.5 percent to $1.44 billion from $1.35 billion, which included a $114.7 million contribution from the Jimmy Choo brand. Kors in November completed its $1.2 billion takeover of Jimmy Choo.

Wall Street’s consensus estimate was $1.29 on revenues of $1.38 billion.

Investors were pleased with the results, sending shares of Kors up 9.3 percent to $71.49 in pre-market trading at 7:35 a.m.

John D. Idol, chairman and chief executive officer, said the Kors’ “innovative fashion luxury offerings” for the holiday season created excitement among customers and that the Jimmy Choo brand continued to “deliver glamorous luxury product,” which when coupled with brand communications, helped to drive revenue in the quarter.

The company also said that it grew its women’s footwear and ready-to-wear businesses as consumer embraced feminine and embellished holiday offerings. Further, accessories sales were better-than-expected due to new merchandise that resonated with consumers.

The new merchandising at the Kors brand helped the firm grow its retail revenue by 1.1 percent to $846.3 million, boosted by the addition of 32 new new stores since the end of the third quarter of fiscal 2017. While comparable sales slipped 3.2 percent, the company said, “Comparable-store sales exceeded expectations and favorable response to new product innovation combined with reduced promotional activity drove higher average unit retails in North America digital flagships and lifestyle stores.” Wholesale sales of the Kors brand fell 8.9 percent to $430.8 million, reflecting the planned reduction in inventory levels in the channel.

The company raised its fiscal year 2018 guidance, with diluted EPS now expected in the range of $4.40 to $4.45. That’s an increase from the previous $3.85 to $3.95 range. Kors projected overall sales to increase to $4.66 billion, including a contribution of $225 million to $230 million from Jimmy Choo, up from the prior estimate of $4.62 billion.

For the fourth quarter, the company forecasts diluted EPS in the range of 50 cents to 55 cents, on total revenues of between $1.11 billion to $1.13 billion. The revenue guidance includes a contribution of $110 million to $115 million from the Jimmy Choo brand.

At the end of the quarter, the Kors brand had 848 retail stores, including concessions, plus an additional 150 retail stores, including concessions, operated through licensing partners. For Jimmy Choo, there were 179 retail stores, including concessions, with an additional 55 retail stores, including concessions, operated through licensing partners.

 

 

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