Michael Kors sees income fall, looks to Versace for earnings growth

Michael Kors has delivered total revenue growth of 9.3 per cent to US$1.25 billion ($1.72 billion)  during the second quarter of fiscal 2019.

However, net income for the group fell 32 per cent to US$137.6 million ($189.76 million) from US$202.9 million ($279.81 million), or US$0.91 ($1.25) per diluted share compared to US$1.32 ($1.82) the year prior.

“With the acquisition of Versace we have built one of the world’s leading fashion luxury groups in just one year, setting the stage for accelerated revenue and earnings growth,” Michael Kors chairman and chief executive John D. Idol said.

The Michael Kors brand saw comparable store sales fell by 2.1 per cent, reporting a flat revenue for the quarter of US$643.9 million ($887.97 million).

Jimmy Choo, however, saw revenue of US$116.7 million ($160.94 million) – leading to an operating loss of US$18.4 million ($25.37 million).

GlobalData Retail managing director Neil Saunders said the results were disappointing after a good start during Q1.

“Although overall revenue growth looks robust, it continues to be flattered by the acquisition of Jimmy Choo, which has yet to annualise out,” Saunders said.

“In short, after slowly climbing the steep hill of recovery, Michael Kors now appears to be rolling back down in reverse.”

Saunders said the acquisition of Versace could prove to be a distraction that limits Michael Kors’ ability to fix the core problems with its main brand.

“Despite its status, Versace is also not a brand at the pinnacle of health: there is work to be done on boosting sales and reenergizing the business,” Saunders explained.

“Given Michael Kors’ relative lack of success with its own label, we do not see the group being able to easy undertake the retooling required to generate superior results.”

However, looking forward to the full 2019 fiscal year Michael Kors has raised its full year earnings per share guidance to US$4.95 to US$5.05 ($6.83 to $6.96), while its forecasted revenue of US$5.12 billion ($7.06 billion) is maintained.

Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.


Comment Manually

I have read and agree to the Terms and Conditions and Privacy Policy.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Inside Retail Polls

Myer's new chief executive
Is John King the right CEO to lead Myer's turnaround?


Following Nike's lead, Gillette embraces social issues in its marketing, causing both furore and praise from consum… https://t.co/ZnQVYS8Fwo

32 mins ago

Ashley Hughes also previously worked at Diageo, Johnny Walker, Smirnoff Vodka and Bacardi, as well as a six year st… https://t.co/j0aXI5v1IJ

5 hours ago

Concepts such as an in-store cafe and florist, as well as monogramming and product repair, have been tested interna… https://t.co/b2FG1MmBtY

8 hours ago

FREE NEWS BRIEFS Get breaking news delivered