Michael Kors Holdings Limited Announces Strong First Quarter
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Luxury fashion group Michael Kors delivered better than anticipated revenue, operating margin, and earnings per share growth in its Q1 FY19 results, with total revenue increasing 26.3 per cent to US$1.2 billion.
Total operating margin reached 17.9 per cent, up from last years 15.7 per cent for the period, while earnings per diluted share were US$1.22 on a reported basis, an increase of 52.5 per cent compared to the prior year.
The Jimmy Choo brand exceeded expectations due to strong performance in footwear.
“Our fashion leadership remains strong, which drove consumers to respond favourably to both new fashion introductions and core products,” said chairman and CEO John D. Idol.
“Our global fashion luxury group continues to see the benefits of our long term growth strategy which is driven by both the Michael Kors and Jimmy Choo brands. Looking ahead we remain optimistic about our business for the remainder of fiscal 2019 and beyond.”
These strong results must be seen in the context of lackluster results in the prior year, according to analyst, which saw revenues drop by a “disastrous” 8.2 per cent in the US.
“Admittedly, the 26 per cent uplift in total revenue continues to be flattered by the addition of Jimmy Choo, but even when this is excluded, revenue still rose by a solid 8.1 per cent,” said Saunders.
“One of the vehicles helping create a better impression on consumers are stores. Here, Michael Kors has invested a significant amount in renovating older outlets to create a more luxurious experience.
“Early results are encouraging with a much better revenue performance coming from the refurbished shops than the rest of the chain.”
Due to the positive result, the company raised full year adjusted earnings per share guidance from US$4.90 to US$5, and expects full year total revenue to reach US$5.125 billion.
Michael Kors also revealed it expects second quarter to bring total revenue of approximately US$1.26 billion, with retail revenue to grow by low-single digits.
Questions & Answers
Q.What contributed to the better-than-expected performance of Michael Kors Holdings Limited in the first quarter?
What contributed to the better-than-expected performance of Michael Kors Holdings Limited in the first quarter?
The luxury fashion group saw strong performance across its revenue, operating margin, and earnings per share. The Jimmy Choo brand, in particular, exceeded expectations due to robust footwear sales, helping drive the positive results.
Q.What was the previous year's performance like for Michael Kors, and how does this quarter compare?
What was the previous year's performance like for Michael Kors, and how does this quarter compare?
The prior year's results were lacklustre, with US revenues dropping by 8.2 per cent. This quarter shows a significant turnaround, with total revenue increasing by 26.3 per cent, even accounting for the Jimmy Choo acquisition.
Q.How did Michael Kors improve its consumer impression and revenue in its physical stores?
How did Michael Kors improve its consumer impression and revenue in its physical stores?
Michael Kors invested significantly in renovating older outlets to create a more luxurious shopping experience for consumers. These refurbished shops have shown a much better revenue performance compared to the rest of the chain.
Q.What are the company's financial expectations for the remainder of the fiscal year 2019?
What are the company's financial expectations for the remainder of the fiscal year 2019?
The company raised its full-year adjusted earnings per share guidance to US$5 and expects total full-year revenue to reach US$5.125 billion. For the second quarter, it anticipates approximately US$1.26 billion in total revenue.
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