Michael Kors Q4 earnings rise, comparable sales up 2.3 percent

Michael Kors Holdings Limited has said that for the fourth quarter, earnings per diluted share were 0.29 dollar, a 0.46 dollar increase compared to last year. On an adjusted basis, earnings per diluted share were 0.63 dollar compared to 0.73 dollar in the prior year. Comparable sales for the quarter increased 2.3 percent.

Commenting on the company’s performance, John D. Idol, Michael Kors’ Chairman and CEO, said in a media statement: “Fiscal 2018 was an exciting year for our company as we established a foundation to support long term growth. We created a global fashion luxury group with the acquisition of Jimmy Choo and completed the first year of our Runway 2020 strategic plan for the Michael Kors brand, ending the year significantly ahead of our expectations.”

Highlights of Michael Kors’ fourth quarter results

For the fourth quarter ended March 31, 2018, total revenue increased 10.8 percent to 1.18 billion dollars, including a 107.9 million dollars contribution from Jimmy Choo. On a constant currency basis, total revenue increased 7.2 percent.

MK Retail revenue increased 4.4 percent to 600.6 million dollars. Since the fourth quarter of last year, the company opened 50 stores, primarily in Asia, and closed 48 stores. Comparable sales increase was driven by growth in the accessories, footwear, ready-to-wear and men's categories. On a constant currency basis, retail revenue increased 0.1 percent, and comparable sales decreased 1.7 percent.

MK Wholesale revenue decreased 3.2 percent to 441.3 million dollars and on a constant currency basis decreased 6.1 percent. Licensing revenue decreased 11.1 percent to 29.7 million dollars.

Gross profit for the quarter increased 14.5 percent to 709.8 million dollars and as a percentage of total revenue was 60.2 percent. Adjusted gross profit increased 14.9 percent to 712.3 million dollars, and as a percentage of total revenue was 60.4 percent compared to 58.2 percent in the fourth quarter of fiscal 2017. Net income attributable to MKHL was 44.1 million dollars or 0.29 dollar per diluted share, based on 154.3 million weighted average diluted shares outstanding. Net loss attributable to MKHL was 26.8 million dollars or 0.17 dollar per diluted share, based on 161.8 million weighted average diluted shares outstanding. Adjusted net income attributable to MKHL was 96.5 million dollars or 0.63 dollar per diluted share.

At March 31, 2018, Michael Kors operated 829 retail stores, including concessions, and an additional 151 retail stores, including concessions, were operated through licensing partners. Including licensed locations, there were 980 Michael Kors stores worldwide at the end of the fourth quarter of fiscal 2018. At March 31, 2018, Jimmy Choo operated 182 retail stores, including concessions, and an additional 61 retail stores, including concessions, were operated through licensing partners. Including licensed locations, there were 243 Jimmy Choo stores worldwide at the end of the fourth quarter.

Review of Michaels Kors’ full year performance

For the fiscal year ended March 31, 2018, total revenue increased 5 percent to 4.72 billion dollars including a 222.6 million dollars contribution from Jimmy Choo. On a constant currency basis, total revenue increased 3.6 percent. MK Retail revenue increased 5.4 percent to 2.71 billion dollars, while comparable sales decreased 2.2 percent. On a constant currency basis, retail revenue increased 3.9 percent, and comparable sales decreased 3.7 percent.

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MK Wholesale revenue decreased 7.7 percent to 1.64 billion dollars and on a constant currency basis decreased 9.1 percent. Licensing revenue for the year decreased 0.6 percent to 144.9 million dollars.

Gross profit increased 7.4 percent to 2.86 billion dollars and as a percentage of total revenue was 60.6 percent, or 60.7 percent on an adjusted basis. This increase was primarily attributable to improved MK Retail gross margin and a 20 basis points contribution from the inclusion of Jimmy Choo, partially offset by the expected decline in the MK Wholesale gross margin.

Net income attributable to MKHL was 591.9 million dollars or 3.82 dollars per diluted share, based on 155.1 million weighted average diluted shares outstanding. Adjusted net income was 701 million dollars or 4.52 dollars per diluted share compared to 712.1 million dollars or 4.24 dollars per diluted share, for the same period of fiscal 2017.

Michael Kors expects Q1 and FY19 comparable sales to remain flat

For the first quarter of fiscal 2019, the company expects total revenue to be approximately 1.135 billion dollars, including between 140 million dollars and 145 million dollars of incremental Jimmy Choo revenue. Comparable sales for Michael Kors are expected to be approximately flat. The company expects operating margin to be approximately 15.2 percent and diluted earnings per share are expected to be in the range of 0.90 dollar to 0.95 dollar, including anticipated benefit from Jimmy Choo of approximately 0.01 dollar to 0.03 dollar.

For fiscal 2019, the company expects total revenue to be approximately 5.10 billion dollars, including between 570 million dollars and 580 million dollars of incremental Jimmy Choo revenue. Comparable sales for Michael Kors are expected to be approximately flat. The company expects operating margin to be approximately 17.7 percent and diluted earnings per share are expected to be in the range of 4.65 dollars to 4.75 dollars, including dilution from Jimmy Choo of approximately 0.05 dollar to 0.10 dollar.

Picture:Michael Kors website

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