Michael Kors Holdings Ltd.
) reported yet another strong quarterly performance. The company's
first-quarter fiscal 2015 earnings per share of 91 cents came miles
ahead of the Zacks Consensus Estimate of 81 cents per share while
rising 49.2% year over year. Earnings also came much ahead of the
company's own guided range of 78-80 cents.
The company's quarterly revenues of $919.2 million handily
surpassed the Zacks Consensus Estimate of $850 million and grew
nearly 43.4% year over year.
Consistent robust performance across all segments and geographies
facilitated this growth.
Comparable store sales (comps) increased 24.2% in the quarter,
making this the 33rd straight quarter of comps growth.
Gross profit surged 43.9% year over year to $571.6 million, while
gross margin grew 20 basis points (bps) to 62.2%. Operating profit
increased 40.1% year over year to $276.8 million whereas operating
margin shrunk 70 bps to 30.1%.
Net sales generated in the Retail segment increased 47.5% year over
year to $480.2 million aided by a comps rise of 24.2% along with
115 new stores openings over the past year. Operating profit
increased 38.4% to $142.7 million.
For the Wholesale segment, revenue increased 40% to $406.8 million
while operating profit grew 45.2% to $117.7 million.
Licensing segment revenues rose 30.5% to $32.1 million while
operating profit grew 22.6% to $16.4 million.
Revenues across North America (U.S. and Canada) grew 30.3% to
$718.9 million while comps jumped 18.7%. Additionally, the region's
wholesale also contributed to the rise with improved sales in
accessories and footwear as well as the ongoing transformations of
shop-in-shops into department stores.
In Europe, increasing brand recognition and demand led to a
whopping 128% rise in revenues, which came in at $185.5 million.
Comps in the region stood out registering a 54.2% growth over the
Lastly, revenue grew 88.7% year over year to $14.8 million in the
Other Regions, including the markets of Japan, Latin America and
the Far East.
Other Financial Data
As of Jun 28, 2014, Michael Kors had cash and cash equivalents of
$1,125 million and shareholders' equity of nearly $2,029.4 million.
At the end of first quarter, Michael Kors operated 605 stores
across the globe, inclusive of licensed locations.
Driven by stellar first quarter results, management raised fiscal
2015 guidance. For the full year, revenues are likely to be in the
range of $4.25-$4.35 billion as against earlier projection of
$4.0-$4.1 billion. Comps are projected to increase in the high
teens. Earnings are expected to be in the range of $4.00-$4.05
against the earlier projection of $3.85-$3.91 per
share. The Zacks Consensus Estimate is pegged at $3.92 per share,
which could see an upward revision in the coming days.
Further, management expects second-quarter fiscal 2015 revenues to
be $950-$960 million, comps to increase in the high teens and
earnings per share to be 85-87 cents. The tax rate is likely to be
around 32.5%. The Zacks Consensus Estimate is pegged at 88 cents
Michael Kors has performed impressively in the last few quarters.
This Zacks Rank #3 (Hold) stock is seeking to carve a niche in the
high-end retail sector by broadening its footprint in strategic
markets and offering merchandise that caters to the tastes of
In addition to its watch and handbag collection, Michael Kors is
now focused on enhancing its apparel, footwear and other
miscellaneous categories to compete better with peers like Coach
), Hanesbrands Inc. (
) and Ralph Lauren Corp. (
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