Michael Kors Shares Dip Following Weak Earnings, Forecast

Shares of

dipped more than 10 percent in pre-market trading after the company reported weaker-than-expected earnings for the fiscal fourth quarter and issued a downbeat forecast for the current quarter. The Tsim Sha Tsui, Hong Kong-based company posted quarterly net earnings of $182.6 million, or $0.90 per share, compared to $161 million, or $0.78 per share, in the year-ago quarter. Its total revenue climbed 17.8 percent year-over-year to $1.1 billion from $917.5 million, while revenue on a constant currency basis gained 23.3 percent. However, analysts were expecting a profit of $0.91 per share on revenue of $1.08 billion. The average estimate among 53 Estimize users was for earnings of $0.94 per share and revenue of $1.1 billion. Its same store sales declined 5.8 percent in the quarter. Its retail net sales rose 14.9 percent to $469.4 million, while wholesale net sales surged 20.4 percent to $570.4 million. Licensing revenue rose 16.5 percent to $41.3 million. Total revenue in North America gained 13.7 percent to $840.5 million, while European revenue jumped 33.5 percent to $219.8 million. Revenue in Japan rose 42.7 percent to $19.2 million. Gross profit jumped 14.8 percent to $630.8 million in the quarter. At March 28, 2015, Michael Kors operated 526 retail stores, including concessions, versus 405 retail stores at the end of the year-ago quarter. Michael Kors repurchased 1,409,682 shares of the its ordinary shares during the quarter for around $92.0 million in open market transactions. John D. Idol, the Company's Chairman and Chief Executive Officer, said, "Fiscal 2015 marked another year of sales and earnings growth in excess of 30%. While we were faced with a number of headwinds in the fourth quarter, we were pleased with the strong performance across our segments and geographies. We believe that our results demonstrate the strength of the Michael Kors brand as our luxury products continue to resonate with consumers worldwide. Looking at Fiscal 2016, this will be a year of strategic investments as we continue to develop our powerful platform to support the numerous growth initiatives that are now underway. We see multiple top line growth opportunities through international expansion, digital e-commerce flagships, new store openings and additional shop-in-shop conversions in our wholesale channel." For the fiscal first quarter, Michael Kors projects earnings of $0.74 to $0.78 per share, on revenue of $930 million to $950 million. Analysts had expected earnings of $1.03 per share on revenue of $1.09 billion. Michael Kors projects FY16 earnings of $4.40 to $4.50 per share, on revenue of $4.7 billion to $4.8 billion. Analysts had expected earnings of $4.70 per share on revenue of $5.05 billion. Michael Kors shares dipped 10.78 percent to $54.06 in pre-market trading.