Michael Kors Stock Tumbles on Q4 Earnings, Weak Guidance

by MR Magazine Staff

Michael_KorsShares of Michael Kors Holdings fell by up to 17% in early trading on Wednesday after the company reported fourth-quarter earnings and Q1 2016 fiscal outlook, according to Business Insider, which also noted that Michael Kors shares are down 19% year-to-date and 37% for the past 12 months.

For the fourth quarter ending March 28, 2015, total revenue increased 17.8% to $1.1 billion from $917.5 million in the fourth quarter of fiscal 2014. Retail net sales increased 14.9% to $469.4 million driven by 121 net new store openings since the end of the fourth quarter of fiscal 2014 and e-commerce sales from the recently launched U.S. e-commerce site, partially offset by a 5.8% decrease in comparable store sales. On a constant currency basis, retail net sales grew 21.1%, and comparable store sales decreased 1.7%. Wholesale net sales increased 20.4% to $570.4 million and on a constant currency basis, wholesale net sales grew 25.8%. Licensing revenue increased 16.5% to $41.3 million.

At the end of March 2015, Michael Kors operated 526 retail stores, compared to 405 retail stores in the same period last year. Including licensed locations, there were 728 Michael Kors stores worldwide at the end of the fourth quarter of fiscal 2015, according to 24/7 Wall St.

Outlook, however, was weak for first quarter of fiscal 2016. The company issued guidance for the first quarter of fiscal 2016, expecting total revenue to be in the range of $930 million to $950 million and EPS to be in the range of $0.74 to $0.78. The consensus estimates call for EPS of $1.03 on $1.09 billion in revenue for the period, according to 24/7 Wall St.

According to Business Insider, analysts Erinn Murphy and Eric Johnson believe guidance is too high. “We still believe guidance may be too optimistic given comps [comparable store sales] are now in negative territory and FY16 guidance predicated on a positive low single digit constant currency comp,” they wrote.

Kors CEO John Idol wrote in his company’s earning’s release: “While we were faced with a number of headwinds in the fourth quarter, we were pleased with the strong performance across our segments and geographies. We believe that our results demonstrate the strength of the Michael Kors brand,” he added, “as our luxury products continue to resonate with consumers worldwide.”