Quarterly results for Michael Kors Holdings Inc were better than expected when the company posted its report on Tuesday. As a result, then, the company has lifted its annual revenue forecast, with the strategy of opening more stores, particularly in light of strong demand in China.
Shares are up 18 percent.
Also—and for the very first time—the US fashion accessories maker shared revenue estimates from its recent deal to buy upscale shoe designer/shoemaker Jimmy Choo PLC.
“We are encouraged by our first quarter performance, although we continue to believe that fiscal 2018 will be a transition year for our company, as we focus on laying the foundation for the future by executing on our strategic plan,” CEO John Idol said in a statement.
By late morning, the share price was up nearly 20 percent.
Now, it should be noted that the fiscal report from the first quarter showed that profifts of the Kors brand fell 15 percent, with revenue down 3.6 percent year-over-year. However, same store sells fell nearly 6 percent in the first quarter (which ended July 1), against the near 9 percent decline Consensus Metrix had expected.
Still, the luxury fashion design firm said its fiscal quarter net income fell 15 percent, to $125.5 million—approximately 80 cents per share; down from $147.1 million, or 83 cents per share, from the year prior.
According to GlobalData Retail Managing Director Neil Saunders, in a note to clients, “The numbers are something of a step forward.” He continues, “While the numbers may strengthen [from here], the rest of this fiscal year will essentially be one of rebuilding and refining the brand, as well as closing further excess capacity and investing in channels and stores that have the best forward potential.”
All in all, total first quarter revenue beat the analyst estimate of $918 million, coming in at $952.4 million. With that—and excluding results of Jimmy Choo; at least, for now—Kors raised its annual revenue forecast to approximately $4.28 billion. Furthermore, the company also expects comparable sales to fall only single digits.
Jefferies analyst Randal Konik wrote, in a client note, “Management guided to both better top and bottom-line metrics for next quarter and the fiscal year, which is key as the market has been afraid of more guidance cuts. That’s simply not happening.”