Michael Kors Stock Soars on Earnings Score
Michael Kors stock is up more than 27% this year already, most of the gain being attributable to today's pop in the luxury brand. Kors' earnings for the quarter were $1.33 per share, way ahead of the 83 cent estimates that people had expected. Revenues were $1.15B versus the $1.05B consensus.
The handbag maker boasted an impressive 60% gross margin which was up 1% year over year, highlighting the strength of its business and its overall brand.
Kors is the new owner of Jimmy Choo, which it expected will add about a billion dollars in sales. The luxury footwear brand is quite popular and fits in well under the luxury Michael Kors umbrella. Kors itself gets its sales from its own retail shops as well as wholesale. The company said that the wholesale division was up 8%, while retail was up 2%. Kors has 985 stores worldwide.
The strength seen in this retail company gives confidence to investors that Amazon has yet to affect this luxury brand. Michael Kors is flexible enough to sell its much coveted products through any retail channel, and is seeing the benefits of this.
Management raised guidance for next year to revenue of $4.6B up from the previous guidance of $4.28B. Although the company expects its same store sales to decrease. Jimmy Choo will add $220 million if incremental revenue which is included in the estimate. Subtracting this out, the company is still looking to see a boost in organic growth. Management is looking for earnings of between $1.22 to $1.27 a share for the third quarter.