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Shares of Michael Kors Holdings Ltd. (KORS) are hovering close to their 52-week high of $50.69 after strong fiscal 2013 first quarter results, which included a whopping 70.0% earnings surprise. Furthermore, Zacks Consensus Estimates for this fiscal year and next have moved sharply higher in the past 7 days, underscoring its Zacks #1 Rank (Strong Buy).
With a year-to-date growth of 82.4%, this well-known global luxury brand is riding on the success of its multi-channel strategy, unique design and strong infrastructure.
Earnings Grow, Future Bright
On August 14, Michael Kors announced fiscal 2013 first-quarter earnings per share of 34 cents, beating the Zacks Consensus Estimate by 14 cents and growing 161.5% year over year.
Total revenue jumped 71% year over year to $414.9 million and surpassed the Zacks Consensus Estimate of $368 million. Solid sales growth in each of the company’s business segments and across all geographies drove the upside.
Sales at the retail segment grew 76% on the back of a 37.3% rise in comparable store sales and the opening of 76 new stores during the quarter. Net sales at the wholesale and licensing segments advanced 66% and 61%, respectively.
Gross profit was up 83% to $251.0 million, while gross margin expanded 420 basis points to 60.5%. Operating income in the quarter totaled $111.9 million, up 149% year over year, with operating margin growing 850 basis points to 27.0%.
Buoyed by the solid fiscal first quarter results, Michael Kors projects earnings for the second quarter of fiscal 2013 between 33 cents and 35 cents per share. Sales for the upcoming quarter are expected to be $490 million to $500 million, on the back of a 30% rise in comparable store sales.
For fiscal 2013, the company expects earnings between $1.32 and $1.34 per share, on net sales of about $1.8 million to $1.9 million. The company’s guidance is based on comparable store sales increasing in the mid- to high- 20% range.
Earnings Estimates on the Upside
The Zacks Consensus Estimate for fiscal 2013 has grown nearly 20.5% to $1.35 per share in the last 7 days, as six of seven estimates were revised upward. The Zacks Consensus Estimate for fiscal 2014 advanced 17.3% to $1.63 per share on four upward revisions out of six. The raised estimates for fiscal 2013 and 2014 reflect year-over-year growth of nearly 68.2% and 21.3%, respectively.
Valuation Premium Justified Continued... |