Michael Kors Holdings Ltd. swung to the black for its fourth-quarter earnings results, and easily beat Wall Street’s consensus estimates.
For the three months ended March 31, net income was $44.1 million, or 29 cents a diluted share, from a net loss of $26.8 million, or 17 cents, a year ago. On an adjusted basis, diluted EPS was 63 cents. Total revenues rose 10.8 percent to $1.18 billion from $1.06 billion. Comparable sales rose 2.3 percent, boosted by strong consumer response in the accessories, footwear, ready-to-wear and men’s categories. In the quarter, retail revenues at Michael Kors rose 4.4 percent to $600.6 million, while wholesale revenues decreased 3.2 percent to $441.3 million. Licensing revenues declined 11.1 percent to $29.7 million.
Wall Street was expecting adjusted EPS of 60 cents on revenues of $1.15 billion.
John D. Idol, chairman and chief executive officer, said, “Fiscal 2018 was an exciting year for our company as we established a foundation to support long-term growth. We created a global fashion luxury group with the acquisition of Jimmy Choo and completed the first year of our Runway 2020 strategic plan for the Michael Kors brand, ending the year significantly ahead of our expectations.”
Idol added that the company has a number of initiatives planned to drive growth in both of its luxury brands. At Michael Kors, Idol said growth is expected to be led by its retail business via product, brand engagement and customer experience. At Jimmy Choo, he said the company will continue to make strategic investments to expand the retail fleet globally, as well as grow out the accessories component of its business.
A further avenue for growth will be acquisitions. Idol said the company “will continue to explore acquisitions to complement our existing luxury portfolio.”
At quarter’s end, the company’s debt totaled $874.4 million. It has $804.7 available for future borrowings under its revolving credit facilities.
For the first quarter, the company expects diluted EPS in the range of 90 cents to 95 cents, on revenues forecasted at $1.14 billion, including contribution of $140 million to $145 million from its Jimmy Choo business.
For fiscal 2019, the company guided diluted EPS to between $4.65 to $4.75, on revenues estimated at $5.10 billion.
Analysts’ expectations for both periods were already at the high-end of the company’s guided ranges before the earnings release. In pre-market trading, shares of Michael Kors were trading down 6.6 percent to $63.73 at 7:25 a.m., suggesting that investors were hoping for even higher forecasts from the company.