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Michael Kors Q2 revenues rise 6.9 percent

By Prachi Singh

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Michael Kors Holdings revenues increased 6.9 percent to 1,13 billion dollars from 1.06 billion dollars for the second quarter of fiscal 2016 ended September 26, 2015. On a constant currency basis, total revenue increased 12.3 percent.

“We are pleased with our second quarter results, which were ahead of expectations and reflected the continued expansion of our luxury brand worldwide. We drove growth in our retail and wholesale segments as well as across our operating regions in the Americas, Europe and Japan, with our compelling fashion products and jet set shopping experience. Importantly, in our retail segment, our North American digital flagship sales continued to accelerate this quarter and we drove sequential improvement in our comp performance,” said John D. Idol, the Company’s Chairman and Chief Executive Officer.

Retail sales rebound 7.5 percent

Retail net sales increased 7.5 percent to 532.8 million dollars driven by 116 net new store openings since the end of the second quarter of fiscal 2015 and e-commerce sales from the company's North America digital flagships, partially offset by an 8.5 percent decrease in comparable store sales. On a constant currency basis, retail net sales grew 14.7 percent and comparable store sales decreased 3.4 percent.

Wholesale net sales increased 7.8 percent to 554 million dollars and on a constant currency basis, wholesale net sales grew 11.8 percent. Licensing revenue decreased 8.1percent to 43.2 million dollars.

Total revenue in the Americas increased 4.5 percent to 838.2 million dollars on a reported basis and increased 5.6 percent on a constant currency basis. European revenue grew 2.3 percent to 243.4 million dollars on a reported basis, and grew 20.6 percent on a constant currency basis. Revenue in Japan increased 36.1 percent to 22.4 million dollars on a reported basis, and increased 60.7 percent on a constant currency basis.

Gross profit increased 3 percent to 664.4 million dollars, and as a percentage of total revenue was 58.8 percent. Gross profit margin was reduced by approximately 89 basis points due to the change in foreign currency exchange rates.

At September 26, 2015, the company operated 589 retail stores, including concessions, compared to 473 retail stores, including concessions, at the end of the same prior-year period. The company had 215 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 804 Michael Kors stores worldwide at the end of the second quarter of fiscal 2016.

Revenue rise 7.1 percent in H1

For the first six months ended September 26, 2015 total revenue increased 7.1 percent to 2.12 billion dollars from 1.98 billion dollars in the same period of fiscal 2015. On a constant currency basis, total revenue increased 12.8 percent.

Retail net sales increased 8.2 percent to 1.06 billion dollars. Comparable store sales decreased 9 percent. On a constant currency basis, retail net sales grew 15.4 percent and comparable store sales declined 4.2 percent. Wholesale net sales increased 6.2 percent to 978 million dollars and on a constant currency basis, wholesale net sales grew 10.9 percent. Licensing revenue increased 3.6 percent to 81.9 million dollars.

Gross profit increased 4.2 percent to 1.27 billion dollars, and as a percentage of total revenue, was 59.9 percent. This compares to 61.6 percent in the same period of fiscal 2015.

Provides outlook for the third quarter and FY16

For the third quarter of fiscal 2016, the company expects total revenue to be in the range of 1.33 billion dollars to 1.35 billion dollars. On a constant currency basis, total revenue is expected to increase in the mid-single digit range assuming a 42 million dollars impact from the change in foreign currency rates. The company expects a mid-single digit comparable store sales decrease on a reported basis and a low single digit decrease on a constant currency basis. Diluted earnings per share are expected to be in the range of 1.44 dollars to 1.48 dollars for the third quarter of fiscal 2016.

For fiscal 2016, the company expects total revenue to be in the range of 4.60 billion dollars to 4.65 billion dollars. On a constant currency basis, total revenue is expected to increase in the low-double digit range assuming a 164 million dollars impact from the change in foreign currency rates. The company expects a mid-single digit comparable store sales decrease on a reported basis and a low-single digit decrease on a constant currency basis. Diluted earnings per share are expected to be in the range of 4.38 dollars to 4.42 dollars for fiscal 2016.

Michael Kors