Michael Kors European sales rise 108.6% in Q2 2015

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Q1 and Q2 results show total revenue of £1.25bn for fashion empire.

Michael Kors Holdings Ltd. has announced its Q2 2015 financial results for the period ending September 27 2014, citing a 42.7% increase in total revenue and a 16.4% boost in comparable store sales.

Total revenue increased 42.7% to $1.1 billion (£689.8m) from $740.3 million (£464.2m) in the second quarter of Q2 2014.

Retail net sales also increased 39.4% to $495.6m (£310.7m), driven by 121 new store openings since the end of the second quarter of fiscal 2014 and a 16.4% increase in comparable store sales.

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Wholesale net sales increased 46.1% to $514.1m (£322.4m) and licensing revenue increased 42.8% to $46.9m (£29.4m).

Income from operations was $305.6m (£191.6m), or 28.9% as a percentage of total revenue, compared to $221.5m (£138.9m), or 29.9% as a percentage of total revenue, for Q2 2014.

Overall, net income was $207m (£129.8m), or $1.00 (0.62p) per diluted share, compared to a net income of $145.8m (£91.4m), or $0.71 (0.44p) per diluted share, in Q2 2014.

Global Sales

Revenue in North American jumped 29.8% to $802.2m (£503m), but it was European sales that showed the most spectacular growth of 108.6% to $237.9m (£149.1m), with comparable store sales increasing 41.1%.

Elsewhere, revenue in Japan increased 106.3% to $16.5m (£10.3m), with comparable store sales growth of 52.9%.

Retail Network

As of September 27 2014, Michael Kors operated 473 retail stores, including concessions, compared to 352 retail stores and concessions at the end of the previous year. Including stores operated by license partners, Michael Kors has 649 stores worldwide as of Q2 2015.

Michael Kors chairman and chief executive officer John D. Idol commented: “Our strong second quarter results reflect our fashion leadership, aspirational product offering and jet-set luxury image that continue to resonate with customers globally.

“Once again, we delivered exceptional performance with both revenue and earnings per share growth in excess of 40%. This ongoing momentum reflects strength across our operating segments and geographies as we continue to expand our presence globally.”

Q1 and Q2 2015

In addition, Michael Kors has released its Q1 and Q2 results for the six months ended September 27 2014, announcing total revenue of $2.0bn (£1.25bn) up 43.1% on the $1.4 bn (£877.8m) in the same period of fiscal 2014.

Retail net sales increased 43.2% to $975.8m (£611.8m), while comparable store sales increased by 20.2%. Additionally, wholesale net sales increased 43.3% to $920.9m (£577.4m) and licensing revenue increased 37.6% to $79.1m (£49.5m).

Gross profit for the first six months increased 43.6% to $1.2bn (£752.4m), and as a percentage of total revenue increased to 61.6%, compared to 61.3% in the Q1 and Q2 of 2014.

Finally, net income for the first six months was $394.7m (£247.4m), or $1.90 (£1.19) per diluted share.

Share Repurchase Program

The Michael Kors board of directors has authorized a $1bn share repurchase program.

Executive vice president and chief financial officer, Joseph B. Parsons, stated: “We are pleased to initiate a share repurchase program, which reflects the Board and management’s confidence in our ability to achieve our long term growth objectives and generate strong free cash flow. This repurchase program underscores our commitment to returning value to shareholders, while maintaining the financial flexibility to strategically invest in our business.”

Outlook

For the third quarter of fiscal 2015, the company expects total revenue to be in the range of $1.27bn (£796m) to $1.30bn (£815m), assuming a low double digit comparable store sales increase.

For fiscal 2015, Michael Kors expects total revenue to be in the range of $4.3bn (£2.69bn) to $4.4bn (£2.75bn).

 

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