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Michael Kors Q2 earnings increase 37 percent

By Prachi Singh

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Management

Michael Kors has reported earnings per diluted share of 1.32 dollars on a reported basis and 1.33 dollars on an adjusted basis, an increase of 37 percent on the prior year. The company said, acquisition of Jimmy Choo provides an opportunity to grow the brand’s revenue to 1 billion dollars globally.

Commenting on the results, John D. Idol, the company’s Chairman and Chief Executive, said in a media release, “This is a transformative time for Michael Kors Holdings Limited as we established our global fashion luxury group with the recently completed acquisition of Jimmy Choo. Our second quarter results were better than expected, and we are pleased with our continued progress executing on our strategic plan, Runway 2020.”

Q2 revenues rise 5.4 percent at Michael Kors

For the second quarter ended September 30, 2017 total revenue increased 5.4 percent to 1.15 billion dollars from 1.09 billion dollars in the second quarter of fiscal 2017. On a constant currency basis, total revenue increased 4.4 percent.

Retail net sales increased 8 percent to 645 million dollars driven in large part by 56 net new store openings since the end of the second quarter of fiscal 2017, as well as the increase in ecommerce sales in Europe and Asia. Comparable sales decreased 1.8 percent. On a constant currency basis, retail net sales increased 7.2 percent, and comparable sales decreased 2.5 percent.

Wholesale net sales increased 2.5 percent to 463.6 million dollars and on a constant currency basis, wholesale net sales increased 1.2 percent. Licensing revenue decreased 2.1percent to 38 million dollars.

Total revenue in the Americas increased 0.9 percent to 751.9 million dollars on a reported basis and increased 0.6 percent on a constant currency basis. European revenue increased 9.2 percent to 270.7 million dollars on a reported basis, and increased 4.6 percent on a constant currency basis. Revenue in Asia increased 30.4 percent to 124 million dollars on a reported basis, and increased 33.5 percent on a constant currency basis.

Gross profit increases 7.2 percent in Q2

Gross profit increased 7.2 percent to 690.8 million dollars, and as a percentage of total revenue was 60.2 percent. The company said, foreign currency translation and transaction favorably impacted gross profit margin by approximately 20 basis points. This compares to gross margin of 59.2 percent in the second quarter of fiscal 2017.

Net income attributable to MKHL was 202.9 million dollars, or 1.32 dollars per diluted share against 160.9 million dollars or 0.95 dollar per diluted share. Excluding 1.6 million dollars or 0.01 dollar per diluted share, in adjustments, including transaction costs and unrealized gain on derivative contract related to the acquisition of Jimmy Choo and retail store-related restructuring and non-cash impairment charges, net income attributable to MKHL for the second quarter was 204.5 million dollars or 1.33 dollars per diluted share. Net income for the same period in fiscal 2017 was 164.1 million dollars, or 0.97 dollar per diluted share, excluding 3.2 million dollars in retail store-related non-cash impairment charges.

At September 30, 2017, the company operated 843 retail stores, including concessions, compared to 787 retail stores, including concessions, at the end of the same prior-year period. The company had 142 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 985 Michael Kors stores worldwide at the end of the second quarter of fiscal 2018.

Michael Kors revenue up 1.1 percent for six months period

For the six month ended September 30, 2017 total revenue increased 1.1 percent to 2.10 billion dollars from 2.08 billion dollars in the same period of fiscal 2017. On a constant currency basis, total revenue increased 1 percent.

Retail net sales increased 9 percent to 1.26 billion dollars, while comparable store sales decreased 3.8 percent. On a constant currency basis, retail net sales grew 9.3 percent, and comparable sales decreased 3.7 percent. Wholesale net sales decreased 9.4 percent to 0.8 billion dollars and on a constant currency basis, wholesale net sales decreased 9.9 percent. Licensing revenue decreased 3.6 percent to 66.9 million dollars.

Gross profit for the first six months increased 2.4 percent to 1.27 billion dollars, and as a percentage of total revenue was 60.3 percent. Michael Kors added that foreign currency translation and transaction favourably impacted gross profit margin by approximately 20 basis points. This compares to gross margin as a percentage of revenue of 59.5 percent in the same period in fiscal 2017.

Net income attributable to MKHL for the first six months of fiscal 2018 was 328.4 million dollars or 2.11 dollars compared to 308 million dollars or 1.78 dollars per diluted share in the same period last year. Excluding 2.7 million dollars or 0.02 dollar per diluted share, in adjustments, including transaction costs and unrealized gain on derivative contract related to the acquisition of Jimmy Choo and retail store-related restructuring and non-cash impairment charges, net income attributable to MKHL for the first six months was 331.1 million dollars or 2.13 dollars per diluted share. For the same time period in fiscal 2017, net income was 322.5 million dollars or 1.87 dollars per diluted share.

Michael Kors expects Q3 revenues between 1.355 to 1.385 bn dollars

For the third quarter of fiscal 2018, the company expects total revenue to be between 1.355 billion dollars and 1.385 billion dollars, including between 105 million and 110 million dollars of incremental Jimmy Choo revenue. Comparable sales for the Michael Kors brand are expected to decline in the high-single digits. The company expects operating margin to be approximately 17.5 percent. Diluted earnings per share are expected to be in the range of 1.22 dollars to 1.27 dollars, including the anticipated dilution from Jimmy Choo of approximately 0.04 dollar.

For fiscal 2018, the company expects total revenue to be approximately 4.59 billion dollars, including between 215 million and 225 million dollars of incremental Jimmy Choo revenue. Comparable sales for the Michael Kors brand are expected to decline in the mid-single digits. The company expects operating margin to be approximately 16 percent. Diluted earnings per share are expected to be in the range of 3.85 dollars to 3.95 dollars, including the anticipated dilution from Jimmy Choo of approximately 0.08 dollar.

Picture:Facebook/Michael Kors

Michael Kors