Michael Kors Q1 revenue witness 7.3 percent growth

Thursday, 06 August 2015

REPORT Michael Kors Holdings revenue for the first quarter ended June 27, 2015 increased 7.3 percent to 986 million dollars from 919.2 million dollars in the first quarter of fiscal 2015. On a constant currency basis, total revenue increased 13.4 percent.

Retail net sales increased 9 percent to 523.3 million dollars driven by 107 net new store openings since the end of the first quarter of fiscal 2015 and e-commerce sales from our North American digital flagships, partially offset by a 9.5 percent decrease in comparable store sales. On a constant currency basis, retail net sales grew 16 percent, and comparable store sales decreased 5 percent. Wholesale net sales increased 4.2 percent to 424 million dollars and on a constant currency basis, wholesale net sales grew 9.7 percent. Licensing revenue increased 20.5 percent to 38.7 million dollars.

Commenting on the results, John D. Idol, the company’s Chairman and Chief Executive Officer, said, “Our first quarter performance reflects better than expected results in both our top and bottom line with growth across our North America, Europe and Asia regions. In addition, on a global basis we saw solid growth in accessories and footwear as these categories performed well in our retail stores and we experienced strong sell-through in our wholesale channel.”

Total revenue in North America increased 1.2 percent on a reported basis and 1.9 percent on a constant currency basis. European revenue grew 16.9 percent on a reported basis, and 42.2 percent on a constant currency basis. Revenue in Japan increased 32.7 percent on a reported basis, and 57.4 percent on a constant currency basis. Gross profit increased 5.6 percent and as a percentage of total revenue was 61.2 percent. Gross profit margin was reduced by approximately 63 basis points due to the change in foreign currency exchange rates. This compares to 62.2 percent in the first quarter of fiscal 2015.

At June 27, 2015, the company operated 550 retail stores, including concessions, compared to 443 retail stores, including concessions, at the end of the same prior-year period. The company had 224 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 774 Michael Kors stores worldwide at the end of the first quarter of fiscal 2016.

For the second quarter, the company expects total revenue to be in the range of 1.06 billion dollars to 1.08 billion dollars. On a constant currency basis, total revenue is expected to increase in the high single digit range assuming a 60 million dollars impact from the change in foreign currency rates. The company expects a high 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 0.86 dollar to 0.90 dollar.

For fiscal 2016, the company expects total revenue of approximately 4.7 billion dollars to 4.8 billion dollars. On a constant currency basis total revenue is expected to increase in the low double digit range assuming a 192 million dollars impact from the change in foreign currency rates. The company expects a low-single digit comparable store sales decrease on a reported basis, and flat comparable store sales on a constant currency basis. Diluted earnings per share are expected to be in the range of 4.40 dollars to 4.50 dollars for fiscal 2016.

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