Michael Kors forecast disappoints as North American sales slow

(Reuters) - Luxury accessories retailer Michael Kors Holdings Ltd forecast a lower-than-expected profit for the current quarter after North American same-store sales in the holiday shopping period rose at the slowest pace since the company went public in 2011.

The company, founded by fashion designer Michael Kors, also reported its first quarterly decline in gross margins, helping to send its shares down 9 percent in early trading.

However, the fast-growing company still managed to report a 30 percent rise in revenue and 32 percent rise in net income. Revenue was in line with market expectations while earnings were higher than expected.

Michael Kors increased discounting and offered more promotions in the quarter, in contrast to Coach Inc and Kate Spade & Co , which reported strong results with less emphasis on discounting.

Michael Kors' North America same-store sales growth slowed to 6 percent in the three months ended Dec. 27, falling below 10 percent for the first time since the company's IPO.

The company blamed a shift in consumer shopping habits for the slowdown.

"We believe ... they are migrating their purchases to our e-commerce site at a greater rate than we had initially anticipated," Chief Executive John Idol said on a call.

Michael Kors said North America same-store sales would have been 380 basis points higher, if the 73 percent growth in e-commerce sales had been included.

The company, which gets about 16 percent of revenue from outside North America, also said a strong dollar was weighing on results.

Michael Kors said it expected current-quarter profit of 89 to 92 cents per share, below the average analyst estimate of 94 cents, according to Thomson Reuters I/B/E/S.

The company's profit beat estimates in the holiday quarter despite a 31 percent jump in costs to $514.6 million.

The company's net income rose to $303.7 million, or $1.48 per share, in the quarter ended Dec. 27 from $229.6 million, or $1.11 per share, a year earlier.

Analysts on average had expected $1.33 per share.

Revenue rose 30 percent to $1.31 billion.

Michael Kors shares were down 9 percent at $65.00 in premarket trading on Thursday. The stock had fallen about 10 percent in the six months to Wednesday's close.

(Editing by Don Sebastian)

WhatsAppFacebookTwitterLinkedinBeloudBluesky