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.”
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.
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 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.