Michael Kors Holdings Ltd.’s second-quarter results reflect progress from a pull-back in store promotions and continued gains from its Runway 2020 initiative.
For the three months ended Sept. 30, net income rose 26.1 percent to $202.9 million, or $1.32 a diluted share. Diluted earnings per share on an adjusted basis were $1.33. Total revenues were up 5.4 percent to $1.15 billion, which included a 5.6 percent rise in net sales to $1.11 billion. The company also said that net retail sales rose 8 percent to $645 million, driven mostly by 56 store openings and growth in e-commerce sales in Europe and Asia. Comparable sales slipped 1.8 percent. Further, revenues in the Americas rose 0.9 percent to $751.9 million; 9.2 percent in Europe to $270.7 million, and 30.4 percent in Asia to $124 million.
Wall Street analysts were expecting 83 cents on revenues of $1.04 billion.
The company, which recently completed the acquisition of the Jimmy Choo brand, continues to believe that it can grow the footwear brand’s revenue to $1 billion globally.
“We believe that bringing together these two iconic brands further strengthens our growth opportunities, increases our product and geographic diversification, and importantly, creates a platform for future acquisitions,” said John D. Idol, chairman and chief executive officer.
Idol added that the second quarter’s results were “better than expected,” and trumpeted progress on the execution of management’s strategic plan, dubbed Runway 2020. “The positive signs that we are seeing in our business illustrate that our efforts across product innovation, brand engagement and our customer experience are beginning to take hold. While we continue to expect fiscal 2018 to be a transition year for the Michael Kors brand, ultimately we believe that these efforts will drive improved financial performance,” Idol said.
As part of Runway 2020, the company said it has increased new fall offerings by 40 percent and has been reducing promotional activity, particularly in the department store channel. The company also said during the quarter it was able to drive double-digit, global comparable sales growth in women’s footwear and ready-to-wear categories. The company has also focused on growing its digital and social media base, whether from digital flagships across North America, Europe and Asia, or increasing its social media engagement to more than 38 million followers.
The company guided third-quarter diluted EPS to be in the range of $1.22 to $1.27 on total revenue of between $1.36 billion and $1.39 billion, which includes $110 million of incremental contribution from the Jimmy Choo brand.
For fiscal 2018, the forecast was a range of $3.85 to $3.95 in diluted EPS on revenues of $4.59 billion, which includes between $215 million and $225 million in incremental revenue from the Jimmy Choo brand.
Shares of Kors inched up 1 percent to $48.09 in premarket trading at 7:32 a.m.