Michael Kors Tumbles After Posting Disappointing European Retail Sales

Michael Kors

Michael Kors Holdings Ltd (NYSE: KORS)

Michael Kors stock was down more than 11% before the opening bell Wednesday after the luxury handbag maker posted missed second-quarter revenue estimates. The company improved its 2018 adjusted earnings-per-share guidance but maintained its revenue outlook of around $5.125 billion.

Total revenue jumped 9.3% year over year but fell short of Refinitiv consensus of $1.26 billion. The results pushed the stock toward a 12-month low in early trade. Sales from European retail stores declined 10% during the 13-week period to Sept. 29, 2018.

In recent years, the company has made several attempts to establish its presence in Europe where luxury fashion consumers prefer buying from local luxury brands such as Kering and LVMH.

KORS Earnings & Outlook

Second-quarter net income attributable to the company was $137.6 million, or $0.91 per share, down from $202.9 million, or $1.32 per share a year earlier. Earnings adjusted for special items, were $1.27 per share, while revenue increased 9.3% to $1.25 billion from $1.15 billion in the same three months last year.

Analysts were expecting the company to post adjusted earnings of $1.10 per share on revenue of $1.26 billion, according to figures compiled by Refinitiv. Jimmy Choo revenue was $116.7 million beating estimates of $114.8 million, while Michael Kors retail revenue came to $643.9 million, shy of expectations of $659.3 million.

Looking ahead, Michael Kors estimates earnings of between $1.52 to $1.57 per share for the current quarter, compared with Wall Street forecasts for earnings of $1.79 per share.

For the full year, the company expects adjusted earnings to be in the range of $4.95 to $5.05 per share, compared with its earlier outlook of $4.90 from $5.00 per share.

Michael Kors CEO Comments

John D. Idol, the Chief Executive Officer of Michael Kors commented, “We are pleased to report results that have again exceeded our expectations, and are raising our fiscal 2019 EPS guidance to a range of $4.95 to $5.05, reflecting double digit earnings growth for the year. As we enter the second half of fiscal 2019 we look forward to welcoming Versace into our group. With the acquisition of Versace, we have built one of the world’s leading fashion luxury groups in just one year, setting the stage for accelerated revenue and earnings growth. This is a truly remarkable and historic moment for our company and we look forward to completing this transformational acquisition in the coming months.”

Michael Kors Company Profile

Michael Kors Holdings Ltd. engages in the design and distribution of sportswear, accessories, footwear and apparel of branded women’s apparel and accessories and men’s apparel. The firm operates its business through three segments: Retail, Wholesale and Licensing.

The Retail segment operates collection stores, lifestyle stores, including concessions and outlet stores located primarily in the United States, Canada, Europe and Japan. The Wholesale segment sells the company’s products to department stores, as well as specialty retail stores and travel shopping locations.

The Licensing segment licenses its trademarks on products such as fragrances, cosmetics, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties. The company was founded by Michael David Kors on December 13, 2002 and is headquartered in London, the United Kingdom. – CNN Money