A Tale Of Two Luxury Retailers: Investors Punish Michael Kors, But Love Tiffany
Shares of Michael Kors Holdings Ltd (NYSE: KORS) lost nearly one quarter of their value on Wednesday, touching new 52-week lows. At the same time, shares of Tiffany & Co. (NYSE: TIF) were surging more than 10 percent.
The sharp move in both retailers stemmed from their respective quarterly prints that were released Wednesday morning.
Michael Kors Punished On Weak Guidance
Michael Kors earned $0.90 in the fourth quarter, a penny short of expectations. Revenue of $1.08 billion was in-line with expectations while its net income improved to $182.6 million from $161 million a year ago.
However, Michael Kors issued guidance and expects to earn $0.74 to $0.78 in the first quarter –- noticeably short of the $1.03 per share analysts are expecting. For the full fiscal year 2016, the company expects to earn $4.40 to $4.50 per share, also short of the $4.70 analysts were expecting.
The bearish sentiment continued on Wednesday following JPMorgan's downgraded of Michael Kors to Neutral from Overweight.
Tiffany Rewarded On Better Than Expected Results
Tiffany, on the other hand, reported a better than expected first quarter result in which the company earned $0.81 per share, $0.11 better than expected. Likewise, revenue of $962 million topped the $918.68 million analysts were expecting while gross margin increased to 59.1 percent from 58.2 percent in the same quarter a year ago.
Tiffany was facing a difficult quarter as the luxury retailer faced uncertainties coming from global economic worries and the effect of a strong U.S. dollar and a difficult sales comparison in Japan.
Tiffany's Chief Executive Officer Frederic Cumenal noted that the continued success of TIFFANY T jewelry collection and the launch of the CT60 watch collection contributed to a quarter that was "somewhat better than...anticipated."
Unlike Michael Kors, Tiffany's may have calmed investor concerns about full year performance. The company maintained its prior full year fiscal guidance of "minimal growth" in net earnings per diluted share from the $4.20 earned in fiscal 2014.
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