Michael Kors 4QF18 first take: EPS again delivers upside, but FY19 outlook appears conservative - TAG (68.22)
TAG notes KORS reported better than expected EPS results for the fiscal fourth quarter (though not to the magnitude of recent reports), but FY19 guidance is a bit short of consensus expectations. KORS's strong momentum has stalled so far this year, and the conservative guidance provided today may continue that pattern over the near term, in their view. While reported comps for the quarter were positive (against a very easy compare), they did decrease 1.7% in constant currency. In addition, the guidance for flat comps for the first quarter and for all of FY19 may come as a disappointment as well as the company begins to lap its steep pullback in promotional activity in the retail channel. The results continue to show progress on its initiatives to improve AUR and gross margin, while upside to conservative operating expense ratio guidance has contributed to earnings beats over the last several quarters. They see the ongoing rationalization across the space as healthy for the group in general, with improved profitability potential in the handbag space overall as the result; Market Perform.
KORS down 4% premarket; call at 8:30