Michael Kors Crushes Analysts With Profits Soaring to End Fiscal 2013

Andrew Klips  |

Luxury retailer Michael Kors Holdings Ltd. (KORS) reported Wednesday that its fourth-quarter profit more than doubled as it beat Wall Street expectations on both top and bottom lines, putting an exclamation point on a strong fiscal year as it offered a rosy earnings outlook for the current year as well.

For the fourth quarter ended March 30, the Hong Kong-based company said sales totaled $597.2 million, up 57.1 percent from $380 million in the year prior quarter. Net income was $101.1 million, or 50 cents per share, versus $43.6 million, or 22 cents per share, in the fourth quarter of 2012.

The results smoked analyst expectations of EPS of 39 cents on revenue of $556 million.

The results also topped Michael Kors’ prior top-end guidance of EPS of 34 cents on sales of $525 million.

The increased revenue and profits were derived from widespread growth. Same-store-sales in North America were up 35 percent, helping drive revenue from $339.33 million in Q4 2012 to $516.95 million in the recent quarter. In Europe, comparable store sales improved by 63 percent with overall European sales rising nearly 100 percent to $73.08 million. In Michael Kors’ licensing segment, which includes watches and eyewear, revenue was up 16 percent to $19.78 million.

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Michael Kors operates 400 stores directly or through licensing partners in some of the most popular cities in the world, including New York, Beverly Hills, London, Paris, Munich, Dubai, Seoul, Tokyo, Hong Kong and more. Sales in regions outside of the U.S. and Europe increased in the fourth quarter to $7.13 million from $3.63 million in the year prior quarter. On a year-over-year basis, the company had 96 more locations at the end of fiscal 2013, compared to fiscal 2012.

“Overall, we believe that the Michael Kors luxury brand is ideally positioned within the global luxury lifestyle market and we look forward to continuing to advance on our long-term objectives in fiscal 2014 and beyond,” said John Idol, chairman and chief executive at Michael Kors, in a corporate statement.

For the full fiscal year 2013, revenue increased 67.5 percent compared to the year earlier to $2.2 billion. Net income was $397.6 million, or $1.97 per share, versus $147.4 million, or 78 cents per share in fiscal 2012.

Looking ahead, the company sees first-quarter revenue in the range of $555 million to $565 million, assuming a 20 percent increase in same-store-sales. Profits are expected between 46 cents and 48 cents per share. The outlook is in line with analyst predictions of EPS of 47 cents on revenue of $564.6 million.

For all of fiscal 2014, the company expects sales between $2.65 billion and $2.75 billion with comparable store sales growing between 15 percent and 20 percent. Earnings per share are targeted in the range of $2.43 to $2.47. Analysts forecast EPS of $2.42 on sales of $2.8 billion.

On a day that the markets are broadly lower, shares of KORS are ahead by 1.6 percent at $63.00 about one hour into the session. So far in 2013, shares are up about 28 percent.

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