Michael Kors Hits All-Time High on Q1 Earnings, Rosy Outlook

Andrew Klips |

High-end retailer Michael Kors Holdings Ltd. (KORS) is printing new all-time highs Tuesday after disclosing results from its fiscal 2014 first quarter that again beat analysts on top and bottom lines to continue to build momentum that has been growing for more than one year.  In the prior quarter, Michael Kors crushed market expectations when it reported 50 cents per share in profits.

For the first quarter, the company, which sells upscale clothing, footwear, apparel and accessories in department stores worldwide, said revenue was $640.9 million, up 54.5 percent from $414.9 million in the year prior quarter.  Net income totaled $125.0 million, or 61 cents per share, versus $68.6 million, or 34 cents per share, in the first quarter of fiscal 2013.  That’s an 82 percent increase in profits.

Wall Street was anticipating EPS of 49 cents on revenue of $568.0 million.

Helping boost revenue was 75 new store openings since the end of the first quarter last year and a 27.3-percent surge in sales at stores open more than one year.  All tallied, retail net sales improved by 51.5 percent to $325.7 million.  Wholesale net sales swelled by 59.3 percent to $290.6 million.  Licensing revenue, the smallest contributor to total sales, increased 40.7 percent to $24.6 million.

Revenue in North America increased from $377.15 million last year to $551.55 million in the recent quarter.  Sales in Europe soared 144 percent from $33.39 million to $81.48 million.

Gross profit rose 58.3 percent to $397.3 million.  As a percentage of revenue, gross profit climbed to 62.0 percent, compared to 60.5 percent in last year’s quarter.

“We attribute the ongoing momentum to our fashion design leadership combined with an aspirational jet-set luxury in-store experience. As we continue to successfully execute on our strategic initiatives, we remain excited about our future growth potential,” said John D. Idol, chairman and chief executive at Michael Kors.

To that end, the company lifted its guidance for fiscal 2014, now seeing revenue between $2.8 billion and $2.9 billion and EPS in the range of $2.67 to $2.69.  Previously, the company forecast the high end of earnings per share at $2.47 and the top end of revenue at $2.75 billion.  The market was expecting earnings of $2.57 and sales of $2.85 billion.

For the current quarter, EPS is guided between 62 cents and 64 cents on revenue of $695 million to $705 million.  The outlook is in line with analyst expectations of EPS of 64 cents on revenue of $697 million.

In business since 1981, Michael Kors went public in December 2011 with an IPO price of $20 per share.  Shares have been steadily climbing ever since, printing new highs in early Tuesday trading at $71.50, although giving a bit back to hold around $70.55 shortly after the opening bell.

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Companies

Symbol Name Price Change % Volume
ILTCL Insulet Corp. Common 144A n/a n/a n/a 0
KORS Michael Kors Holdings Limited 46.87 -1.37 -2.84 1,778,787

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