=Michael Kors (KORS) reported earnings on Wed 7 Nov 2018 (b/o)

Michael Kors beats by $0.17, reports revs in-line; guides Q3 EPS below consensus, revs below consensus; guides FY19 EPS in-line, reaffirms FY19 revs guidance

• Reports Q2 (Sep) earnings of $1.27 per share, excluding non-recurring items, $0.17 better than the S&P Capital IQ Consensus of $1.10; revenues rose 9.3% year/year to $1.25 bln vs the $1.26 bln S&P Capital IQ Consensus.
  • Adjusted gross profit was $765.4 million and adjusted gross margin was 61.0%, compared to $690.8 million and 60.2% in the prior year.
  • Michael Kors Retail revenue of $643.9 million was approximately flat compared to the prior year. Comparable store sales decreased 2.1%. On a constant currency basis, comparable store sales decreased 1.3%.
    • Michael Kors Wholesale revenue declined 1.3% to $457.8 million compared to the prior year.
    • Michael Kors Licensing revenue decreased 6.8% to $35.4 million compared to the prior year.
  • Jimmy Choo revenue was $116.7 million.
• Co issues downside guidance for Q3, sees EPS of $1.52-1.57 vs. $1.82 S&P Capital IQ Consensus; sees Q3 revs of ~$1.46 bln vs. $1.48 bln S&P Capital IQ Consensus.
  • The Company expects third quarter retail revenue for Michael Kors to grow in the low single digits.
  • The Company expects wholesale revenue to decrease in the high single digits, and licensing revenue to decline in the mid-teens.
• Co issues guidance for FY19, sees EPS of $4.95-5.05, excluding non-recurring items, vs. $5.02 S&P Capital IQ Consensus; reaffirms FY19 revs guidance of ~$5.125 bln vs. $5.14 bln S&P Capital IQ Consensus.
  • Reported comparable store sales for Michael Kors is expected to be down in the low single digits (vs previous guidance of flat comps), primarily driven by an unfavorable currency impact.
  • The Company has raised guidance for operating margin to approximately 18.2%.