Michael Kors Shares Pop After Bright First Quarter

Michael Kors Autumn/Winter 2013 Campaign | Source: Michael Kors

NEW YORK, United States — Strong demand for Michael Kors’ luxury goods again propelled profit in its latest quarter, and the clothing, accessories and handbag maker lifted its outlook for the year.

Shares climbed more than 6 percent in premarket trading Tuesday, setting them on course to open at their highest level since the initial public stock offering in December 2011.

Michael Kors Holdings Ltd. said net income in its fiscal first quarter, which ran through June 29, rose 82 percent to $125 million, or 61 cents per share. Analysts polled by FactSet expected earnings of 49 cents per share.

Last year’s first-quarter profit came to $68.6 million, or 34 cents per share.

Revenue surged 55 percent, to $640.9 million from $414.9 million, surpassing analysts’ prediction of $567.8 million. Revenue at stores open at least a year, a key indicator of a retailer’s health, rose 27 percent. The measure gained 25 percent in North America and 56 percent in Europe. Sales also got a boost from 75 store openings over the past year. The Hong Kong-based company had 442 stores at quarter’s end, including licensed locations.

The company’s strong profit growth since its IPO — earnings nearly tripled in the fiscal year that ended in March — reflects luxury shoppers’ continued appetite for posh handbags and clothing despite economic challenges. Global luxury sales, including higher-end jewelry and clothes, rose about 10 percent to $282 billion last year, according to a Bain & Co. study.

For the year, which runs through March 2014, Michael Kors lifted its earnings outlook to $2.67 to $2.69 per share from a range of $2.43 to $2.47 per share. It now expects revenue between $2.8 billion and $2.9 billion, up from its prior forecast for $2.65 billion to $2.75 billion.

Analysts anticipated earnings of $2.57 per share on revenue of $2.85 billion.

In the current quarter, Michael Kors sees earnings of 62 cents to 64 cents per share, in line with Wall Street estimates, on revenue of $695 million to $705 million, above analysts’ prediction of $694 million.

The stock climbed $4.32, or 6.4 percent, to $72.20 before the market open. Shares have risen 33 percent this year, hitting their highest point since the IPO, at $69.23, on Friday. The company went public at $20 per share.

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  1. Kors’ success has also been attributed to the label’s strategic pricing strategies: for instance, it prices watches in the customer-friendly range of $150-$350, as compared to Gucci, whose watches start at around $400.

    Zack Tyler from San Francisco, CA, United States