LONDON—Michael Kors took a revenue hit in the third quarter with business in Europe and the Americans weakening. Comparable store sales fell and the luxury retailer lowered its outlook for all of 2017.
The company’s expectations for the current quarter also disappointed investors and shares tumbled 11 per cent before the opening bell Tuesday, seemingly headed for a 52-week low.
It has been a rough start to the year for luxury sector. Tiffany & Co. announced the departure of its CEO on Sunday after a dreary holiday season. Ralph Lauren Corp. and CEO Stefan Larsson, who took over top job less than two years ago in hopes of revitalizing the iconic brand, mutually agreed to part ways last week.
Read more:Tiffany abruptly drops CEO
For the three months ended Dec. 31, Michael Kors’ revenue fell to $1.35 billion from $1.4 billion, though that was in line with the expectations of industry analysts that follow the company, according to a survey by Zacks Investment Research.
Revenue declined in Europe and the Americas. While revenue surged 89.1 per cent in Asia, it was due largely to recent acquisitions of previously licensed operations in China and South Korea.
Sales at stores open at least a year, a key indicator of a retailer’s health, dropped 6.9 per cent.
Michael Kors Holdings Ltd. earned $271.3 million, or $1.64 per share, in the quarter. A year earlier the luxury handbag and clothing company earned $294.6 million, or $1.59 per share.
There were fewer shares outstanding in the current quarter.
The performance topped the $1.62 per share that analysts polled by Zacks were calling for.
Yet the conservative outlook overshadowed quarterly profit and revenue figures.
Michael Kors said that it now foresees fiscal 2017 adjusted profit in a range of $4.15 to $4.19 per share on revenue of about $4.48 billion. Its prior outlook was for an adjusted profit between $4.37 and $4.43 per share on revenue of about $4.55 billion. Analysts polled by FactSet expect earnings of $4.37 per share on revenue of $4.55 billion.
For the fourth quarter, the London company anticipates earnings between 68 and 72 cents per share on revenue between approximately $1.04 billion and $1.06 billion. That’s well off the per-share projections from analysts, who were also looking for revenue of $1.11 billion, according to a FactSet survey.
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