Q1 revenue dips at Michael Kors

United States
Published:  10 August, 2017

Michael Kors Holdings, the U.S. based global fashion luxury brand, announced on August 8 its financial results for the fiscal 2018 first quarter ended July 1, 2017. Sales increased whereas revenue declined but its sees a positive outlook with the recent acquisition of the Jimmy Choo brand. 

For the three months ended July 1, 2017 total revenue decreased 3.6% to $952.4 million from $987.9 million in the first quarter of fiscal 2017. On a constant currency basis, total revenue decreased 2.6%.

Retail net sales increased 10.1% to $619.9 million driven in large part by 67 net new store openings since the end of the first quarter of fiscal 2017 and the impact of the acquisition of the Greater China license. Comparable sales decreased 5.9%. On a constant currency basis, retail net sales increased 11.6%, and comparable sales decreased 4.9%. Wholesale net sales decreased 23.0% to $303.6 million and on a constant currency basis, wholesale net sales decreased 22.7%. Licensing revenue decreased 5.6% to $28.9 million.

Total revenue in the Americas decreased 8.2% to $634.1 million on a reported basis and decreased 7.9% on a constant currency basis. European revenue decreased 10.2% to $201.2 million on a reported basis, and decreased 7.5% on a constant currency basis. Revenue in Asia increased 60.2% to $117.1 million on a reported basis, and increased 61.9% on a constant currency basis.

Gross profit decreased 2.8% to $574.7 million, and as a percentage of total revenue was 60.3%. Foreign currency translation and transaction favorably impacted gross profit margin by approximately 10 basis points. This compares to gross margin of 59.9% in the first quarter of fiscal 2017.

The Company operates 838 retail stores, including concessions, compared to 771 retail stores, including concessions, at the end of the same prior-year period. The Company had 141 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 979 Michael Kors stores worldwide at the end of the first quarter of fiscal 2018.

John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “Our first quarter performance exceeded our expectations, driven largely by better than anticipated retail comparable sales results in both North America and Europe. We are encouraged by our first quarter performance, although we continue to believe that fiscal 2018 will be a transition year for our company, as we focus on laying the foundation for the future by executing on our strategic plan, Runway 2020. While it is still early in the process, we are making meaningful progress enhancing our assortments, deepening our connection with consumers, and elevating our jet set luxury experience in our stores and digital flagships."

Idol continued, "In addition, we are pleased to have recently announced plans to form a global fashion luxury group. Our agreement to acquire Jimmy Choo will bring together two iconic brands that are industry leaders in style and trend. Jimmy Choo has a rich history as a luxury brand with a 20-year track record of enduring customer appeal. We are committed to supporting Jimmy Choo's strong brand equity and fashion leadership as we work with its talented management team to realise the brand's significant growth potential. We believe that the development of a global fashion luxury group will increase long-term shareholder value as we create a more diverse product portfolio, increase our exposure to international markets and unlock additional opportunities for future growth."

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