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Michael Kors exceeds guidance and raises outlook

Feb 13, 2018 / United Kingdom
Michael Kors exceeds guidance and raises outlook
The London-based global fashion luxury group announced its financial results for the third quarter ended on the 30th of December. Expectations for the period were exceeded and as result outlook for the full year increased
John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “We are pleased with our third quarter performance, which delivered better than expected results and saw the successful integration of Jimmy Choo into our luxury group. The Michael Kors brand continued to make progress on Runway 2020 initiatives across product innovation, brand engagement and customer experience. Our innovative fashion luxury product offerings for the holiday season created excitement among consumers. At Jimmy Choo, we continued to deliver glamorous luxury product and engaging brand communications, which helped drive revenue during the quarter.”

For the third quarter ended on the 30th of December, total revenue increased by 6.5% totaling 1.44 billion US dollars, including a 114.7 million US dollars contribution from Jimmy Choo, which the company owned for two months of the quarter. On a constant currency basis, total revenue increased by 4.6%.

MK retail revenue increased by 1.1% to 846.3 million US dollars driven in large part by 32 net new store openings since the end of the third quarter of fiscal 2017. Comparable sales decreased by 3.2%, with better than anticipated performance in the Americas and Europe during the Holiday season. On a constant currency basis, retail net sales decreased by 1.0%, and comparable sales decreased by 5.2%. MK wholesale revenue decreased by 8.9% to 430.8 million US dollars and on a constant currency basis decreased by 10.5%, driven by a strategic reduction in inventory levels in the channel. MK licensing revenue increased 12.3% to 48.3 million US dollars.

At the end of last year, Michael Kors operated 848 retail stores, including concessions, and an additional 150 retail stores, including concessions, were operated through licensing partners. Including licensed locations, there were 998 Michael Kors stores worldwide at the end of the third quarter of fiscal 2018.

At the 30th of December 2017, Jimmy Choo operated 179 retail stores, including concessions, and an additional 55 retail stores, including concessions, were operated through licensing partners. Including licensed locations, there were 234 Jimmy Choo stores worldwide at the end of the third quarter of fiscal 2018.

Based on the results now announced, for the fourth quarter of fiscal 2018, the company expects total revenue to be between 1.11 billion US dollars and 1.13 billion US dollars, including between 110 million US dollars and 115 million US dollars of incremental Jimmy Choo revenue. Comparable sales for Michael Kors are expected to decline in the low-single digits.

For fiscal 2018, the company expects total revenue to be approximately 4.66 billion US dollars, including between 225 million US dollars and 230 million US dollars of incremental Jimmy Choo revenue. Comparable sales for Michael Kors are expected to decline in the mid-single digits.

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