Earnings Highlights and Review: Michael Kors Reported Better-than-expected Quarterly Results

Research Desk Line-up: G-III Apparel Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 21, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Michael Kors Holdings Ltd (NYSE: KORS), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=KORS, following the Company’s posting of its fourth quarter and fiscal 2017 financial results on May 31, 2017. The luxury lifestyle retailer provided outlook for the upcoming quarter and fiscal year and announced decision to close approximately 125 stores in the next two years. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Get more of our free earnings reports coverage from other constituents of the Textile – Apparel Clothing industry. Pro-TD has currently selected G-III Apparel Group, Ltd (NASDAQ: GIII) for due-diligence and potential coverage as the Company announced on June 06, 2017, its operating results for Q1 FY18 which ended on April 30, 2017. Register for a free membership today, and be among the early birds that get access to our report on G-III Apparel when we publish it.

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on KORS; also brushing on GIII. With the links below you can directly download the report of your stock of interest free of charge at:

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Earnings Reviewed

For the fourth quarter ended April 01, 2017, Michael Kors’ total revenue decreased 11.2% to $1.06 billion compared to $1.20 billion in Q4 FY16. On a constant currency basis, the Company’s total revenue decreased 10.6%. Michael Kors’ revenue numbers came in ahead of analysts’ forecasts of $1.05 billion. For FY17, the Company’s total revenue decreased 4.6% to $4.49 billion from $4.71 billion in FY16.

Michael Kors’ gross profit fell 11.1% to $619.7 million, and as a percentage of total revenue was 58.2% in Q4 FY17 compared to gross margin of 58.2% in Q4 FY16. The Company stated that foreign currency translation and transaction unfavorably impacted gross profit margin by approximately 20 basis points.

For Q4 FY17, Michael Kors’ loss from operations was $42.6 million, or (4.0)% of total revenue. Excluding $193.8 million of non-cash impairment charges primarily associated with underperforming full-price retail stores, the Company’s income from operations was $151.2 million, or 14.2% as a percentage of total revenue, in the reported quarter compared to operating income of $244.1 million, or 20.4% as a percentage of total revenue, and excluding $10.9 million of impairment charge of $255.0 million, or 21.3% as a percentage of total revenue, in Q4 FY16.

During Q4 FY17, net loss attributable to Michael Kors was $26.8 million, or $0.17 per diluted share, compared to net income attributable of $177.0 million, or $0.98 per diluted share, in Q4 FY16. On an adjusted basis, the Company reported net income of $118.0 million, or $0.73 per diluted share, compared to the prior year’s quarter net income of $184.8 million, or $1.02 per diluted share.

For FY17, net income attributable to Michael Kors totaled $552.5 million, or $3.29 per diluted share compared with net income of $839.1 million, or $4.44 per diluted share, in FY16. On an adjusted basis, the Company posted net income of $712.1 million, or $4.24 per diluted share, compared to net income of $846.9 million, or $4.48 per diluted share, in the year ago same period.

Segment Results

Michael Kors’ retail net sales increased 0.5% to $575.3 million in Q4 FY17, driven primarily by 159 net new store openings since the end of Q4 FY16, including 111 stores associated with the Company’s acquisition of the previously licensed operation in Greater China. The Company’s comparable sales decreased 14.1%. On a constant currency basis, Michael Kors’ retail net sales grew 1.1%, and comparable sales decreased 13.6% in the reported quarter. The Company’s Wholesale net sales decreased 22.8% to $456.1 million in Q4 FY17. Licensing revenue decreased 6.2% on a y-o-y basis to $33.4 million in the reported quarter.

For Q4 FY17, Michael Kors’ total revenue in the Americas decreased 18.0% to $721.0 million on a reported basis. The Company’s European revenue decreased 15.3% to $215.2 million on a reported basis, and declined 11.5% on a constant currency basis. In Q4 FY17, Michael Kors’ revenue in Asia increased 96.3% versus $128.6 million on a reported basis in the year ago comparable period.

Store Update

As of April 01, 2017, Michael Kors operated 827 retail stores, including concessions, compared to 668 retail stores, including concessions, at the end of the same prior-year’s same period. The Company had 133 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 960 Michael Kors stores worldwide at the end of Q4 FY17.

Retail Fleet Optimization

Michael Kors announced in the press release that it intends to close between 100 and 125 of its full-price retail stores over the next 2 years. Over this time period, the Company expects to incur approximately $100 million to $125 million of one-time costs associated with store closures. Collectively, the Company ultimately anticipates ongoing annual savings of $60 million as a result of store closures and the lower depreciation and amortization associated with these impairment charges.

Share Repurchase Program

During Q4 FY17, Michael Kors repurchased 6,641,815 of the Company’s ordinary shares for approximately $250.0 million in open market transactions. As of April 01, 2017, the Company had fully utilized the previously authorized amount under the share repurchase program. On May 25, 2017, the Company’s Board of Directors authorized a new $1 billion share repurchase program.

Outlook

For Q1 FY18, Michael Kors expects total revenue to be between $910 million and $930 million and comparable sales to decrease in the high-single digit range. The Company’s operating margin is expected to be approximately 13.0%. For Q1 FY18, Michael Kors is estimating earnings in the range of $0.60-$0.64 per diluted share and a tax rate of approximately 19%.

For FY18, Michael Kors expects total revenue to be approximately $4.25 billion and comparable sales to drop in the high-single digit range. The Company estimates operating margin to be approximately 16.0%. For FY18, Michael Kors is anticipating earnings in the band of $3.57-$3.67 per diluted share.

Stock Performance

On Tuesday, June 20, 2017, Michael Kors’ stock closed the trading session at $34.54, declining 1.14% from its previous closing price of $34.94. A total volume of 1.69 million shares were exchanged during the session. Shares of the Company have a PE ratio of 10.60 and currently have a market cap of $5.40 billion.

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