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Michael Kors Holdings Limited Announces Second Quarter Fiscal 2016 Results

LONDON, Nov 04, 2015 (BUSINESS WIRE) -- Michael Kors Holdings Limited KORS, +0.92% (the “Company”), a global luxury lifestyle brand, today announced its financial results for the fiscal 2016 second quarter ended September 26, 2015.

For the second quarter ended September 26, 2015:

  • Total revenue increased 6.9% to $1.13 billion from $1.06 billion in the second quarter of fiscal 2015. On a constant currency basis, total revenue increased 12.3%.
  • Retail net sales increased 7.5% to $532.8 million driven by 116 net new store openings since the end of the second quarter of fiscal 2015 and e-commerce sales from the Company's North America digital flagships, partially offset by an 8.5% decrease in comparable store sales. On a constant currency basis, retail net sales grew 14.7%, and comparable store sales decreased 3.4%. Wholesale net sales increased 7.8% to $554.0 million and on a constant currency basis, wholesale net sales grew 11.8%. Licensing revenue decreased 8.1% to $43.2 million.
  • Total revenue in the Americas increased 4.5% to $838.2 million on a reported basis and increased 5.6% on a constant currency basis. European revenue grew 2.3% to $243.4 million on a reported basis, and grew 20.6% on a constant currency basis. Revenue in Japan increased 36.1% to $22.4 million on a reported basis, and increased 60.7% on a constant currency basis.
  • Gross profit increased 3.0% to $664.4 million, and as a percentage of total revenue was 58.8%. Gross profit margin was reduced by approximately 89 basis points due to the change in foreign currency exchange rates. This compares to 61.0% in the second quarter of fiscal 2015.
  • Income from operations was $273.1 million, or 24.2% as a percentage of total revenue. This compares to $305.6 million, or 28.9% as a percentage of total revenue, for the second quarter of fiscal 2015.
  • Net income was $193.1 million, or $1.01 per diluted share, based on a 28.9% tax rate and 191.5 million weighted average diluted shares outstanding, which included an unfavorable impact related to foreign currency exchange rates of approximately $0.06 per share. Net income for the second quarter of fiscal 2015 was $207.0 million, or $1.00 per diluted share, based on a 31.9% tax rate and 207.4 million weighted average diluted shares outstanding.
  • At September 26, 2015, the Company operated 589 retail stores, including concessions, compared to 473 retail stores, including concessions, at the end of the same prior-year period. The Company had 215 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 804 Michael Kors stores worldwide at the end of the second quarter of fiscal 2016.

John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “We are pleased with our second quarter results, which were ahead of expectations and reflected the continued expansion of our luxury brand worldwide. We drove growth in our retail and wholesale segments as well as across our operating regions in the Americas, Europe and Japan, with our compelling fashion products and jet set shopping experience. Importantly, in our retail segment, our North American digital flagship sales continued to accelerate this quarter and we drove sequential improvement in our comp performance. Looking ahead, we believe we are well positioned for a positive holiday period with our exciting new product introductions and gifting assortments in addition to a captivating marketing campaign, all of which are designed to inspire our customer to celebrate the season with effortless glamour and style. The Michael Kors luxury brand remains incredibly strong, and we are focused on continuing to execute our strategic initiatives to drive long-term sustainable growth."

For the first six months ended September 26, 2015:

  • Total revenue increased 7.1% to $2.12 billion from $1.98 billion in the same period of fiscal 2015. On a constant currency basis, total revenue increased 12.8%.
  • Retail net sales increased 8.2% to $1.06 billion. Comparable store sales decreased 9.0%. On a constant currency basis, retail net sales grew 15.4% and comparable store sales declined 4.2%. Wholesale net sales increased 6.2% to $978.0 million and on a constant currency basis, wholesale net sales grew 10.9%. Licensing revenue increased 3.6% to $81.9 million.
  • Gross profit for the first six months increased 4.2% to $1.27 billion, and as a percentage of total revenue, was 59.9%. This compares to 61.6% in the same period of fiscal 2015.
  • Income from operations for the first six months was $521.7 million and as a percentage of total revenue was 24.7%. For the same period of fiscal 2015, income from operations was $582.3 million, or 29.5% as a percentage of total revenue.
  • Net income for the first six months was $367.5 million, or $1.88 per diluted share, based on 195.8 million weighted average diluted shares outstanding, which included an unfavorable impact related to foreign currency exchange rates of approximately $0.12 per share. Net income for the same period of fiscal 2015 was $394.7 million, or $1.90 per diluted share, based on 207.3 million weighted average diluted shares outstanding.

Share Repurchase Program

During the second quarter, the Company repurchased 9,424,385 of the Company's ordinary shares for approximately $400.0 million in open market transactions. As of September 26, 2015, the remaining availability under the Company’s share repurchase program was $258.1 million. The Company also announced today that the Board of Directors approved an amendment to its share repurchase program on November 3, 2015, authorizing the repurchase of up to an additional $500 million of the Company’s ordinary shares and extending the program through March 2018. This increases the initial repurchase authorization previously announced in November 2014 to $2.0 billion, of which approximately $758 million is available for future repurchases. Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy, and other relevant factors. The program may be suspended or discontinued at any time.

Senior Unsecured Credit Facility

On October 29, 2015, the Company entered into an amended and restated senior unsecured revolving credit facility ("2015 Credit Facility"), which replaced its existing credit facility from 2013. The 2015 Credit Facility expires on October 29, 2020 and provides for up to $1.0 billion in borrowings, which may be denominated in U.S. Dollars or other currencies. The Company may use this facility for general corporate purposes, share repurchases and...


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