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How Michael Kors Performed in Key Geographies in Fiscal 1Q18

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KORS in North America and Europe

Michael Kors (KORS) reported a 3.6% YoY (year-over-year) decline in its fiscal 1Q18 sales, which stood at $952 billion. Behind this decline were 8.2% and 10.2% declines in the company’s North American and European operations, which completely offset its 60% rise in Asian sales.

However, KORS’s performance in these two geographies was better than expectated and drove the company’s top-line beat.

John D. Idol, Michael Kors’s chairman and CEO (chief executive officer), stated: “Our first quarter performance exceeded our expectations, driven largely by better than anticipated retail comparable sales results in both North America and Europe.”

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North America

Retail net sales stood flat in North America, while comparable sales fell by mid-single digits. E-commerce continued to show momentum and recorded a double-digit comparable sales jump during the quarter.

Wholesale sales, however, continued to remain weak and declined 19.5%. This fall was mainly driven by the company’s strategic decision to reduce sell-in and limit promotional days.

Europe

European net sales fell 10.2% YoY as the 2.5% increase in retail sales was offset by a 28.4% decline in wholesale revenue. Wholesale revenues plunged as a result of the company’s strategic decision to reduce its shipments into the channel in order to elevate brand positioning.

Asia

Asia retail net sales rose 105% in fiscal 1Q18, primarily due to the shift of China operations into the company-owned retail segment. Excluding China operations, comparable same-store sales fell at a low-single-digit rate.

Notably, ETF investors looking to add exposure to KORS can consider the First Trust Consumer Discretionary AlphaDEX Fund (FXD), which has 1.7% of its portfolio in the stock.

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