Strong Q1 results for Michael Kors

Worldwide
Published:  10 August, 2018

Brand revenues for the U.S. headquartered fashion Group grew +8% in the first fiscal quarter of 2019 ending June 30, 2018, with performance above expectations and particularly driven by the Jimmy Choo footwear range.

Total revenue increased +26.3% to US$1.20 billion, including a US$172.7 million contribution from Jimmy Choo, which was consolidated into results effective November 1, 2017. Gross profit increased +30.6% in the quarter to US$750.8 million, and as a percentage of total revenue was 62.4%. Adjusted gross profit increased +31.1% to US$753.2 million; 62.6% as a percentage of total revenue compared with 60.3% in the first quarter of fiscal 2018.

Michael Kors’ retail revenue increased +3.2% to US$639.5 million largely driven by the opening of nine new stores since the end of the first quarter of fiscal 2018, according to the Group. Comparable sales increased +0.2%, with positive performance in the Americas and Asia, partially offset by declines in Europe. Jimmy Choo's revenue exceeded expectations due to strong performance in footwear, as well as a shift in timing of certain wholesale shipments from second quarter into first quarter.

Income from operations was US$215.2 million, or 17.9% as a percentage of total revenue, including a US$16.1 million contribution from Jimmy Choo, while adjusted income from operations increased 56.1% to US$233.2 million, reflecting higher income from operations for Michael Kors, the inclusion of Jimmy Choo in the current year, and a shift in timing of certain costs from first quarter into second quarter (Q1 2018: US$149.4 million).

“We are encouraged by our first quarter performance, with growth in revenues, gross margin, operating margin as well as earnings per share all exceeding our expectations. Our fashion leadership remains strong, which drove consumers to respond favourably to both new fashion introductions and core products”, said John D. Idol, Chairman and CEO, Michael Kors.

The Group has raised its full year adjusted earnings per share guidance by US$0.25 to US$4.90-5.00, reflecting better than expected first quarter performance for both the Michael Kors and Jimmy Choo brands.