Michael Kors Q3 revenues increase 29.9 percent

Michael Kors revenues for the third quarter ended December 27, 2014 increased 29.9 percent to 1.3 billion dollars from 1 billion dollars in the third quarter of fiscal 2014. On a constant currency basis, total revenue increased 32.6 percent.

Retail net sales increased 37 percent to 689.4 million dollars driven by 114 net new store openings since the end of the third quarter of fiscal 2014, e-commerce sales from the recently launched US e-commerce site and an 8.6 percent increase in comparable store sales. On a constant currency basis, retail net sales grew 40.5 percent, and comparable store sales increased 10.9 percent. Wholesale net sales increased 24.4 percent to 573.8 million dollars and on a constant currency basis, wholesale net sales grew 26.4 percent. Licensing revenue increased 8.6 percent to 51.5 million dollars.

Revenue in North America increased 22.6 percent to 1.1 billion dollars, with a 6 percent increase in comparable store sales. On a constant currency basis, revenue in North America grew 23.1 percent, with a 6.8 percent increase in comparable store sales. European revenue grew 72.1 percent to 241.4 million dollars, with comparable store sales increasing 21.2 percent. On a constant currency basis, revenue in Europe grew 86.3 percent, with a 29.9 percent increase in comparable store sales. Revenue in Japan increased 72.1 percent to 16 million dollars, with comparable store sales growth of 35.4 percent. On a constant currency basis, revenue in Japan grew 96.3 percent, with a 54.4 percent increase in comparable store sales.

Gross profit increased 29.2 percent to 800.1 million dollars, and as a percentage of total revenue was 60.9 percent compared to 61.2 percent in the third quarter of fiscal 2014. At December 27, 2014, the company operated 509 retail stores, including concessions, compared to 395 retail stores, including concessions, at the end of the same prior-year period. The company had 194 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 703 Michael Kors stores worldwide at the end of the third quarter of fiscal 2015.

Commenting on the results, John D. Idol, Chairman and Chief Executive Officer, said, “Our third quarter marked the 13th consecutive period of growth in revenue, comparable store sales and earnings, since our initial public offering. We had a strong holiday season, with comparable stores sales performance led by double digit growth in our accessories category, both in our retail and wholesale channels. We also saw continued momentum across our operating segments and geographies driven by our compelling fashion product offering and jet-set luxury experience that resonated well with customers. In addition, we continued to advance on our multiple growth strategies and in particular, we saw exceptional performance from our recently launched company-owned US e-commerce site, which exceeded our expectations. Overall, we see continued momentum in our business, remain confident in our long-term potential and are committed to enhancing value for our shareholders.”

Total revenue for the first nine months increased 37.5 percent to 3.3 billion dollars from 2.4 billion dollars in the same period of fiscal 2014. On a constant currency basis, total revenue increased 38.6 percent. Retail net sales increased 40.6 percent and comparable store sales increased 15.4 percent. On a constant currency basis, retail net sales grew 42.1 percent, and comparable store sales increased 16.2 percent. Wholesale net sales increased 35.4 percent and on a constant currency basis, wholesale net sales grew 36.1 percent. Licensing revenue increased 24.4 percent to 130.6 million dollars.

Gross profit for the first nine months increased 37.5 percent to 2 billion dollars, and as a percentage of total revenue was 61.3 percent, flat as compared to the same period of fiscal 2014.

For the fourth quarter of fiscal 2015, the company expects total revenue to be in the range of 1.05 billion dollars to 1.08 billion dollars. This assumes a comparable store sales increase of mid-single digits on a reported basis and an increase of high single digits on a constant currency basis. Diluted earnings per share are expected to be in the range of 0.89 dollars to 0.92 dollars for the fourth quarter of fiscal 2015.

For fiscal 2015, the company now expects total revenue to be approximately 4.4 billion dollars. This assumes a comparable store sales increase of low double digits on a reported basis, and an increase of low to mid-teens on a constant currency basis. Diluted earnings per share are now expected to be in the range of 4.27 dollars to 4.30 dollars for fiscal 2015.