Q1FY19 revenue grows 26.3% at Michael Kors

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Exceeding expectations, Michael Kors has recorded 26.3 per cent y-o-y growth in its revenue in the first quarter of fiscal 2019, to a total of $1.20 billion, including a $172.7 million contribution from Jimmy Choo, which was consolidated into results effective November 1, 2017. In the reported period, gross profit increased 30.6 per cent to $750.8 million.

The adjusted gross profit went up 31.1 per cent to $753.2 million, and as a percentage of total revenue was 62.6 per cent. This compared to 60.3 per cent in the first quarter of fiscal 2018. The year-over-year growth was largely driven by improved wholesale gross margins due to lower promotional activity and favourable product mix as well as the inclusion of the higher margin Jimmy Choo business, which contributed 40 basis points. The company’s retail margins also improved during the quarter.

Earnings per diluted share were $1.22 on a reported basis, an increase of 52.5 per cent compared to the prior year. On an adjusted basis, earnings per diluted share were $1.32, an increase of 65.0 per cent compared to the prior year.

Income from operations was $215.2 million, or 17.9 per cent as a percentage of total revenue, including a $16.1 million contribution from Jimmy Choo. Income from operations was $149.4 million, or 15.7 per cent as a percentage of total revenue, for the first quarter of fiscal 2018. The adjusted income from operations increased 56.1 per cent to $233.2 million, or 19.4 per cent as a percentage of total revenue reflecting higher income from operations for Michael Kors, the inclusion of Jimmy Choo in the current year, and a shift in timing of certain costs from first quarter into second quarter. This compared to $149.4 million, or 15.7 per cent as a percentage of total revenue, for the same period in fiscal 2018.

For the second quarter of fiscal 2019, the company expects total revenue of approximately $1.260 billion, including between $110 and $115 million of incremental revenue from Jimmy Choo. The company expects second quarter retail revenue for Michael Kors to grow in the low-single-digits. Comparable store sales on a reported basis are expected to decline in the low-single-digits. Comparable store sales growth is expected to remain positive in the Americas and Asia, offset by expected declines in Europe. The company expects wholesale revenue to decrease in the low-single-digits and licensing revenue to decline in the high-single-digits.

“We are encouraged by our first quarter performance, with growth in revenues, gross margin, operating margin as well as earnings per share all exceeding our expectations. Our fashion leadership remains strong, which drove consumers to respond favorably to both new fashion introductions and core products. Our global fashion luxury group continues to see the benefits of our long term growth strategy which is driven by both the Michael Kors and Jimmy Choo brands. Looking ahead we remain optimistic about our business for the remainder of fiscal 2019 and beyond,” John D Idol, chairman and chief executive officer, said.

For the full year, the company expects total revenue to be approximately $5.125 billion, including between $580 million and $590 million of incremental Jimmy Choo revenue. The reported comparable sales for Michael Kors are expected to be approximately flat, in line with prior guidance. The company has raised guidance for operating margin to approximately 18.0 per cent. The diluted earnings per share are expected to be in the range of $4.90 to $5.00. The company now expects lower EPS dilution from Jimmy Choo of $0.05 to flat, which is a $0.05 cent improvement from prior guidance. (RR)

Fibre2Fashion News Desk – India



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