Michael Kors handbags got steep markdowns during the holidays — and now the company’s stock is taking a hit.
The clothing-and-accessories empire — whose baby-faced founder earned fame as a judge on “Project Runway” — saw its shares tumble more than 13 percent Tuesday as it ratcheted down its profit forecast after a disappointing holiday season.
The warning came after Michael Kors suffered a bigger-than-expected drop in comparable sales in the quarter ended Dec. 31.
Revenue in the Americas region fell 7.4 percent, while Europe sales were down 7 percent. Weakness in the two regions, which together account for nearly all of Michael Kors’ sales, will continue through spring, partly due to lower traffic in shopping malls and a cutback in promotions in North America.
Michael Kors shares were recently off 13.3 percent at $35.77 in early-morning trades.
Kors, like rival Coach, is trying to regain its brand value by cutting supplies to department stores, which have been heavily discounting its products to drive traffic.
The company said it plans to reduce wholesale shipments in the current quarter and expects comparable sales to decrease in the low-teens on a percentage basis.
“While the reduction in wholesale shipments was supposed to aid consolidated gross margin, 3Q results were disappointing,” Mizuho analyst Betty Chen said, noting that operating expenses rose during the quarter.
Michael Kors forecast current-quarter profit of 68 cents to 72 cents per share on revenue of $1.04 billion-$1.06 billion. Analysts were expecting earnings of 93 cents per share and revenue of $1.11 billion.
Sales at stores open for more than a year fell 6.9 percent in the third quarter ended Dec. 31, falling for the seventh time in eight quarters. Analysts had expected a 4.9 percent decline, according to research firm Consensus Metrix.
Net income attributable to the company fell to $271.3 million, or $1.64 per share, from $294.6 million, or $1.59 per share, a year earlier.
Total revenue fell 3.2 percent to $1.35 billion.
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