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Strength in Jimmy Choo Footwear Boosts Michael Kors’ Q1 Top Line

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Aug. 10 2018, Published 12:54 p.m. ET

Discussing Michael Kors first-quarter top line

Michael Kors Holdings (KORS) reported results for the first quarter of 2019 on Wednesday, August 8. The company delivered one of its strongest quarters in the past three years. Its total sales increased 26.3% YoY (year-over-year) to $1.20 billion. Wall Street, in comparison, was expecting a 19.4% YoY increase in sales to $1.137 billion.

About 67% of the increase in sales, around $172 million, was due to the contribution from the Jimmy Choo integration. Jimmy Choo exceeded analyst expectations as well as company guidance during the quarter as the brand’s footwear business delivered a strong performance. The business also benefitted from a shift in the timing of wholesale shipments from the second quarter to the first quarter.

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What drove Michael Kors brand sales

Revenue from the company’s namesake brand Michael Kors increased 8% YoY during the quarter. Retail sales increased 3.2% YoY to $639.5 million, driven by nine net new store openings and comparable sales growth of 0.2%. However, comparable sales growth was mainly due to the positive impact of currency. Excluding the foreign exchange impact, sales comps declined 2.1%.

Retail sales grew at a low-single-digit rate in the Americas driven by low-single-digit growth in comparable-store sales. Asia retail also remained strong as growth was fueled by new store openings and low-single digit improvement in comps. Europe retail sales, however, declined during the quarter as the company took steps to reduce inventory and lower promotional sales.

Wholesale revenue jumped 19.5% YoY during the quarter to $362.8 million, driven by strength in overall business and a shift in wholesale shipment timing from the second to the first quarter.

ETF investors seeking to add exposure to KORS can consider the First Trust Consumer Discretionary AlphaDEX Fund (FXD), which invests 0.6% of its portfolio in the company.

Read the next section for a view on the quarter’s profitability.

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