Michael Kors delivers strong first quarter
Luxury fashion group Michael Kors delivered better than anticipated revenue, operating margin, and earnings per share growth in its Q1 FY19 results, with total revenue increasing 26.3 per cent to US$1.2 billion.
Total operating margin reached 17.9 per cent, up from last years 15.7 per cent for the period, while earnings per diluted share were US$1.22 on a reported basis, an increase of 52.5 per cent compared to the prior year.
The Jimmy Choo brand exceeded expectations due to strong performance in footwear.
“Our fashion leadership remains strong, which drove consumers to respond favourably to both new fashion introductions and core products,” said chairman and CEO John D. Idol.
“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.”
These strong results must be seen in the context of lackluster results in the prior year, according to managing director of GlobalData Retail Neil Saunders, which saw revenues drop by a “disastrous” 8.2 per cent in the US.
“Admittedly, the 26 per cent uplift in total revenue continues to be flattered by the addition of Jimmy Choo, but even when this is excluded, revenue still rose by a solid 8.1 per cent,” said Saunders.
“One of the vehicles helping create a better impression on consumers are stores. Here, Michael Kors has invested a significant amount in renovating older outlets to create a more luxurious experience.
“Early results are encouraging with a much better revenue performance coming from the refurbished shops than the rest of the chain.”
Due to the positive result, the company raised full year adjusted earnings per share guidance from US$4.90 to US$5, and expects full year total revenue to reach US$5.125 billion.
Michael Kors also revealed it expects second quarter to bring total revenue of approximately US$1.26 billion, with retail revenue to grow by low-single digits.
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