Michael Kors (KORS) Tops Q3 EPS by 1c, Guidance Comes in Light

Michael Kors (NYSE: KORS) reported Q3 EPS of $1.64, $0.01 better than the analyst estimate of $1.63. Revenue for the quarter came in at $1.35 billion versus the consensus estimate of $1.36 billion.

On a constant currency basis, retail net sales increased 10.0%, and comparable sales decreased 6.4%..

GUIDANCE:

Michael Kors sees FY2017 EPS of $4.15-$4.19, versus the consensus of $4.38. Michael Kors sees FY2017 revenue of $4.48 billion, versus the consensus of $4.55 billion.

• Comparable sales to decrease in the high-single digit range.

For the fourth quarter of fiscal 2017, the Company expects total revenue to be between $1.035 billion and $1.055 billion, which includes a planned reduction in wholesale shipments, and a comparable sales decrease in the low-teens range. The Company expects operating margin to be approximately 14.0%. Diluted earnings per share are expected to be in the range of $0.68 to $0.72 for the fourth quarter of fiscal 2017. This assumes 164.0 million weighted average diluted shares outstanding and a tax rate of approximately 22%.

(Street sees Q4 EPS of $0.93 on revenue of $1.1 billion.)

John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “During the quarter, we delivered earnings per share results that were in line with our expectations and we continued to focus on our growth pillars, which are centered on consistently delivering innovative fashion products for our customers and enhancing consumer engagement with the Michael Kors brand worldwide. We were pleased with the response to our new Fall and holiday handbag collections as well as the launches of our Michael Kors ACCESS line of wearable technology and our new Wonderlust fragrance. We also saw great consumer response to our new digital flagships in Europe, and are excited to further expand our omni-channel presence as we deepen our relationship with consumers globally. In addition, we continued our expansion in Asia, which we believe represents a $1 billion opportunity over the long term. Overall, we were disappointed with our North American and European comparable store sales performance during the quarter. We believe that headwinds in these markets will continue throughout the Spring season as we face reduced traffic trends in shopping malls, currency fluctuation, uncertainty surrounding certain political changes in European countries and the implementation of our reduced promotional cadence in North America. While we face certain challenges in the short term, we continue to believe that there is meaningful long-term growth ahead for the company as we focus on maintaining our luxury leadership position while expanding the Michael Kors brand internationally.”

For earnings history and earnings-related data on Michael Kors (KORS) click here.

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