Michael Kors Q1 Profit Down, Sees Q2, FY Profit Below View; Stock Down

(RTTNews) - Michael Kors Holdings Limited (KORS), a global luxury lifestyle brand, reported that its net income attributable to MKHL for the fiscal 2017 first quarter ended July 2, 2016 declined to $147.1 million, or $0.83 per share, from $174.4 million or $0.87 per share in the first quarter of fiscal 2016.

In the pre-market trade, KORS is trading at $48.00, down $2.11 or 4.21%.

Excluding $8.9 million after-tax, or $0.05 per share, of one-time costs related to the acquisition of the Company's Greater China licensee, net income attributable to MKHL for the first quarter of fiscal 2017 was $156.0 million, or $0.88 per share. Analysts polled by Thomson Reuters expected the company to report earnings of $0.74 per share. Analysts' estimates typically exclude special items. John D. Idol, the Company's Chairman and Chief Executive Officer, said, "We are pleased to have once again exceeded our first quarter revenue and earnings per share expectations. We delivered another quarter of strong growth in our North American digital flagships, further expanded our presence globally, particularly in Asia, and expanded our fashion product offerings. However, this progress was muted by the continued decline in mall traffic trends as well as a decrease in tourism in certain major cities which negatively impacted our comparable sales performance during the quarter."

Looking ahead, the company said it remains focused on executing against our long-term growth strategies across both product categories and regions.

Total revenue increased 0.2% to $987.9 million from $986.0 million in the first quarter of fiscal 2016. On a constant currency basis, total revenue was flat versus the prior fiscal year. Wall Street expected revenues of $953.04 million.

Retail net sales increased 7.6% to $562.9 million driven primarily by 221 net new store openings since the end of the first quarter of fiscal 2016, including 145 stores associated with the Company's recent acquisitions of Greater China and South Korea and the consolidation of the Latin American operations. Comparable sales decreased 7.4%. On a constant currency basis, retail net sales grew 7.4%, and comparable sales decreased 7.6%. Wholesale net sales decreased 7.0% to $394.4 million and on a constant currency basis, wholesale net sales decreased 7.2%. Licensing revenue decreased 20.9% to $30.6 million.

For the second quarter of fiscal 2017, the Company expects total revenue to be between $1.07 billion and $1.085 billion, which includes a planned reduction in wholesale shipments, and comparable sales to decrease in the mid-single digit range. Earnings per share are expected to be in the range of $0.84 to $0.88 for the second quarter of fiscal 2017. Analysts expected the company to report earnings of $1.03 per share and revenues of $1.11 billion for the second-quarter.

For fiscal 2017, the Company expects total revenue to be flat versus the prior year and comparable sales to decrease in the mid-single digit range. For fiscal 2017, earnings per share are expected to be in the range of $4.56 to $4.64 on a non-GAAP basis, excluding the one-time costs, and $4.51 to $4.59 on a GAAP basis, including the one-time costs.

Wall Street currently is looking for fiscal year 2017 earnings of $4.60 per share on annual revenues of $4.66 billion.