Michael Kors revenue beats on growth overseas
Michael Kors Holdings Ltd. reported its revenue climbed a better-than-expected 6.3% in the latest quarter on strong demand for its accessories and footwear, momentum with its online offerings and international growth.Shares of the company, down 43% over the past year, shot up 14% to $46.30 in premarket trading."We are pleased with our third-quarter results, as we delivered revenue, comparable-store sales and earnings growth ahead of our expectations," Chief Executive John Idol said.
However, the handbag designer and fashion company guided for the final quarter of fiscal 2016 below expectations. Kors expects revenue between $1.13 billion and $1.15 billion, just below analyst estimates for $1.16 billion, according to Thomson Reuters. Earnings are expected to be in the range of 93 cents to 97 cents a share, short of analyst estimates for $1 a share.
The company reaffirmed its full-year guidance.Kors has battled a slowdown in handbag and watch sales, magnified by anemic shopper traffic across the U.S. The company is also being buffeted by the strong dollar, which makes its products more expensive abroad and damps the tourist flow into the U.S., a key source of customers for the company.
Handbags have been one of the hottest categories for retailers in recent years, as new styles and materials prompted women to buy multiple bags a year to match different outfits and occasions, though the trend has slowed of late.
Michael Kors reported a profit of $294.2 million, or $1.59 a share, down from $303.7 million, or $1.48, a year earlier. Earnings were $1.65 on a constant-currency basis.During the third quarter, the company repurchased 4.7 million of its shares for about $200 million. As of Dec. 26, $558.1 million remained under the buyback program.
Revenue, meanwhile, rose to $1.40 billion from $1.31 billion a year ago. The company said revenue increased 9.9%, excluding currency effects.In November, Michael Kors had forecast third-quarter earnings between $1.44 and $1.48 a share on revenue between $1.33 billion and $1.35 billion.
Kors attributed an 11% increase in retail net sales to 114 net new store openings since the end of the fiscal third quarter and e-commerce sales from the company's digital flagships. Still, comparable-store sales edged down 0.9%.Unlike its peers, Michael Kors has tried to stay away from heavy discounting to spur sales. Even so, gross margin fell to 59.5% from 60.9% a year earlier, hurt by currency translation.