Home > General > Michael Kors posts slowest revenue growth since going public

Michael Kors posts slowest revenue growth since going public

Written by Business World, on 27th May 2015. Posted in General

article headline

Michael Kors Holdings Ltd  reported its slowest quarterly revenue growth since it went public in December 2011 as demand for its handbags and accessories weakened in North America, its biggest market.

Shares of the company, which also forecast full-year sales and profit below analysts' expectations, fell as much as 19 percent to a two-and-a-half-year low of $49.03 on Wednesday.

Michael Kors' revenue rose 17.8 percent in the fourth quarter, slowing sharply from the growth of 29.9-74.4 percent it posted for the past 13 quarters.

Same-store sales in North America fell 6.7 percent. Analysts on average had expected a 4.4 percent rise, according to research firm Consensus Metrix.

Lower tourist traffic in U.S. Northeast and Southeast, weak sales in its watches business and shipping delays due to disruptions at West Coast ports hurt sales in North America, Chief Financial Officer Joe Parsons said.

Chief Executive John Idol said watch sales were expected to fall further this year.

Michael Kors said it did not expect its handbag sales to "wildly accelerate" in North America and the category was growing slower than it had in the past five-six years.

The company's shares will remain under pressure as the North American market for handbags and accessories slows and competition intensifies, Baird Equity Research analyst Mark Altschwager wrote in a note.

Michael Kors' margins fell to 58.4 percent from 59.9 percent as the company aggressively offered discounts to attract shoppers at a time rivals Coach Inc and Kate Spade & Co are cutting back on promotions.

Michael Kors has been expanding heavily, opening stores and distributing to retailers such as Macy's Inc, which has led to brand fatigue among shoppers, analysts say.

The handbag maker forecast revenue of $4.7 billion-$4.8 billion and earnings of $4.40-$4.50 per share for the year ending March 2016. The company said it expected a strong dollar to hurt profit by about 20 cents per share.

Analysts were expecting revenue of $5.05 billion and earnings of $4.70 per share, according to Thomson Reuters I/B/E/S.

Michael Kors said it expected same-store sales to be flat in fiscal 2016.

The company's net income rose to $182.6 million, or 90 cents per share, in the quarter ended March 28 from $161 million, or 78 cents per share, a year earlier.

Revenue rose to $1.08 billion from $917.5 million.

Michael Kors' shares were down 18.7 percent at $49.26 on the New York Stock Exchange. (Reuters)

Source: www.businessworld.ie 

More articles from General

image Description

Choosing the Right Time and Attendance System for Your Business in Ireland

Read more
image Description

The Benefits of Choosing a Payroll Bureau in Ireland with Online Payroll Software

Read more
image Description

Tips for Building a Successful Travel Business in Ireland

Read more
image Description

How to Improve Your Business Writing: Simple Tips That Work

Read more
image Description

Leveraging Digital Platform Integration is the Key to Driving Competition Among Businesses

Read more