>>> Michael Kors beats by $0.48, beats on revs; guides Q4 ~in-line --> +7% pre o

>>> Michael Kors beats by $0.48, beats on revs; guides Q4 ~in-line --> +7% pre o
  • Reports Q3 (Dec) earnings of $1.77 per share, excluding non-recurring items, $0.48 better than the Capital IQ Consensus of $1.29; revenues rose 6.4% year/year to $1.44 bln vs the $1.38 bln Capital IQ Consensus. On a constant currency basis, total revenue increased 4.6%.
  • Results exceeded guidance, with better than expected performance from both the Michael Kors and Jimmy Choo brands. MK Retail revenue increased 1.1% to $846.3 million driven in large part by 32 net new store openings since the end of the third quarter of fiscal 2017. Comparable sales decreased 3.2% vs. high single digit decline guidance, with better than anticipated performance in the Americas and Europe during the Holiday season. On a constant currency basis, retail net sales decreased 1.0%, and comparable sales decreased 5.2%. MK Wholesale revenue decreased 8.9% to $430.8 million and on a constant currency basis decreased 10.5%, driven by a strategic reduction in inventory levels in the channel. MK Licensing revenue increased 12.3% to $48.3 million. Gross profit increased 9.7% to $884.0 million, and as a percentage of total revenue was 61.4%. Adjusted gross profit increased 9.9% to $885.6 million, and as a percentage of total revenue was 61.5%. This compares to 59.6% in the third quarter of fiscal 2017.
  • Co issues in-line guidance for Q4, sees EPS of $0.57-0.62, excluding non-recurring items, vs. $0.59 Capital IQ Consensus Estimate; sees Q4 revs of $1.11-1.13 bln vs. $1.14 bln Capital IQ Consensus, including between $110 million and $115 million of incremental Jimmy Choo revenue. Comparable sales for Michael Kors are expected to decline in the low-single digits. The Company expects operating margin to be ~10.0%. Diluted earnings per share are expected to be in the range of $0.50 to $0.55, including the dilution from Jimmy Choo of approximately $0.07. This assumes approximately 155 million weighted average diluted shares outstanding and a tax rate of ~21.0%.including a $114.7 million contribution from Jimmy Choo, which the Company owned for two months of the quarter