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| 8-K - FORM 8-K - Capri Holdings Ltd | d622805d8k.htm |
Exhibit 99.1
Michael Kors Holdings Limited Announces Second Quarter Fiscal 2014 Results
Second Quarter Total Revenue Increased 38.9%; Comparable Store Sales Increased 22.9%
Second Quarter Reported Diluted EPS Increased 44.9% to $0.71
Hong Kong — November 5, 2013 — Michael Kors Holdings Limited (NYSE:KORS) (the “Company”), a global luxury lifestyle brand, today announced its financial results for its fiscal 2014 second quarter ended September 28, 2013.
John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “Our strong financial results in the second quarter underscore Michael Kors’ expanding brand awareness and global presence. Comparable stores sales increased 23%, representing our 30th consecutive quarter of growth. The outstanding revenue performance was driven by strong acceptance of the fashion luxury products created by Michael Kors and our design teams, as well as the exceptional jet-set in-store experience that we offer to customers in our retail stores and in-store shops. Overall, we continue to see great demand for Michael Kors as a global luxury lifestyle brand.”
For the second quarter ended September 28, 2013:
| • | Total revenue increased 38.9% to $740.3 million from $532.9 million in the second quarter of fiscal 2013. |
| • | Retail net sales increased 46.8% to $355.6 million driven by a 22.9% increase in comparable store sales and 83 net new store openings since the end of the second quarter of fiscal 2013. Wholesale net sales increased 29.9% to $351.9 million and licensing revenue increased 65.4% to $32.9 million. |
| • | Gross profit increased 42.4% to $449.9 million, and as a percentage of total revenue increased to 60.8% compared to 59.3% in the second quarter of fiscal 2013. |
| • | Income from operations was $221.5 million, or 29.9% as a percentage of total revenue, as compared to $157.9 million, or 29.6% as a percentage of total revenue, for the second quarter of fiscal 2013. |
| • | Net income was $145.8 million, or $0.71 per diluted share, based on 205.2 million weighted average diluted shares outstanding. Net income for the second quarter of fiscal 2013 was $97.8 million, or $0.49 per diluted share, based on 200.2 million weighted average diluted shares outstanding. |
| • | At September 28, 2013, the Company operated 352 retail stores, including concessions, compared to 269 retail stores, including concessions, at the end of the same prior-year period. The Company had 125 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 477 Michael Kors stores worldwide at the end of the second quarter of fiscal 2014. |
Mr. Idol continued, “We continue to see strong performance across our retail, wholesale and licensing segments both in our North American and international markets. Sales in North America grew 31% and comparable store sales increased 21%, driven by strength across our accessories and watch offerings and strong consumer response to our jet-set in-store experience. In addition, we remain pleased with the performance of our North America wholesale segment with strong growth driven by our accessories and footwear categories as well as the continued sales lift from shop-in-shop conversions in department stores. In Europe, sales grew 101% in the second quarter, as brand awareness continued to drive comparable store sales growth of 45%. Finally, in our licensing segment, revenue increased 65%, driven primarily by the strength in watches and eyewear. In summary, we believe that we are uniquely positioned within the growing global luxury market and we remain excited about the long-term potential of the Michael Kors brand.”
For the first six months ended September 28, 2013:
| • | Total revenue for the first six months increased 45.7% to $1,381.2 million from $947.8 million in the same period of fiscal 2013. |
| • | Retail net sales increased 49.0% to $681.2 million. Comparable store sales increased 25.0%. Wholesale net sales increased 41.8% to $642.4 million and licensing revenue increased 53.8% to $57.5 million. |
| • | Gross profit for the first six months increased 49.4% to $847.1 million, and as a percentage of total revenue increased to 61.3% as compared to 59.8% in the same period of fiscal 2013. |
| • | Income from operations for the first six months was $419.0 million and as a percentage of total revenue was 30.3%. For the same period of fiscal 2013, income from operations was $269.9 million, or 28.5% as a percentage of total revenue. |
| • | Net income for the first six months was $270.8 million, or $1.32 per diluted share, based on 205.5 million weighted average diluted shares outstanding. Net income for the same period of fiscal 2013 was $166.5 million, or $0.83 per diluted share, based on 199.8 million weighted average diluted shares outstanding. |
Outlook
For the third quarter of fiscal 2014, the Company expects total revenue to be in the range of $845 million to $855 million. This assumes a comparable store sales increase in the range of 15% to 20%. Diluted earnings per share are expected to be in the range of $0.83 to $0.85 for the third quarter of fiscal 2014. This assumes 205.5 million weighted average diluted shares outstanding and a 35.5% tax rate.
For fiscal 2014, the Company now expects total revenue to be in the range of $2.9 billion to $3.0 billion. This assumes a comparable store sales increase of approximately 20%. Diluted earnings per share are now expected to be in the range of $2.77 to $2.81 for fiscal 2014. This assumes 205.2 million weighted average diluted shares outstanding and a tax rate of approximately 35.5%.
Conference Call Information
A conference call to discuss second quarter results is scheduled for today, November 5, 2013 at 8:00 a.m. EDT. A replay of the call will be available today at 11:00 a.m. EDT; to access the replay, dial 1-877-870-5176 for domestic callers or dial 1-858-384-5517 for international callers and enter access code 1011766. The conference call will also be webcast live in the investor relations section of www.michaelkors.com. The webcast will be accessible on the website for approximately 90 days after the call.
About Michael Kors
Michael Kors is a world-renowned, award-winning designer of luxury accessories and ready to wear. His namesake company, established in 1981, currently produces a range of products through his Michael Kors and MICHAEL Michael Kors labels, including accessories, footwear, watches, jewelry, men’s and women’s ready to wear, and a full line of fragrance products. Michael Kors stores are operated, either directly or through licensing partners, in some of the most prestigious cities in the world, including New York, Beverly Hills, Chicago, London, Milan, Paris, Munich, Istanbul, Dubai, Seoul, Tokyo and Hong Kong.
Forward Looking Statements
This press release contains forward-looking statements. You should not place undue reliance on such statements because they are subject to numerous uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Forward-looking statements include information concerning the Company’s possible or assumed future results of operations, including descriptions of its business strategy. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “seek,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. The forward-looking statements contained in this press release are based on assumptions that the Company has made in light of management’s experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors that it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual financial results or results of operations and could cause actual results to differ materially from those in these forward-looking statements. These factors are more fully discussed in the “Risk Factors” section and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2013 (File No. 001-35368), filed on May 29, 2013 with the U.S. Securities and Exchange Commission.
CONTACTS:
Investor Relations:
ICR, Inc.
Jean Fontana/Megan Crudele
646-277-1214
jean.fontana@icrinc.com
Media:
ICR, Inc.
Alecia Pulman
203-682-8224
alecia.pulman@icrinc.com
SCHEDULE 1
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net sales |
$ | 707,444 | $ | 513,065 | $ | 1,323,692 | $ | 910,435 | ||||||||
| Licensing revenue |
32,859 | 19,870 | 57,470 | 37,365 | ||||||||||||
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| Total revenue |
740,303 | 532,935 | 1,381,162 | 947,800 | ||||||||||||
| Cost of goods sold |
290,428 | 217,035 | 534,016 | 380,900 | ||||||||||||
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| Gross profit |
449,875 | 315,900 | 847,146 | 566,900 | ||||||||||||
| Total operating expenses |
228,415 | 157,972 | 428,124 | 297,029 | ||||||||||||
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| Income from operations |
221,460 | 157,928 | 419,022 | 269,871 | ||||||||||||
| Interest expense, net |
130 | 555 | 300 | 990 | ||||||||||||
| Foreign currency loss (gain) |
18 | (275 | ) | 276 | (650 | ) | ||||||||||
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| Income before provision for income taxes |
221,312 | 157,648 | 418,446 | 269,531 | ||||||||||||
| Provision for income taxes |
75,504 | 59,820 | 147,642 | 103,058 | ||||||||||||
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| Net income |
$ | 145,808 | $ | 97,828 | $ | 270,804 | $ | 166,473 | ||||||||
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| Weighted average ordinary shares outstanding: |
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| Basic |
202,560,870 | 194,323,935 | 202,686,313 | 193,557,194 | ||||||||||||
| Diluted |
205,154,692 | 200,192,291 | 205,547,191 | 199,791,708 | ||||||||||||
| Net income per ordinary share: |
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| Basic |
$ | 0.72 | $ | 0.50 | $ | 1.34 | $ | 0.86 | ||||||||
| Diluted |
$ | 0.71 | $ | 0.49 | $ | 1.32 | $ | 0.83 | ||||||||
| Statements of Comprehensive Income: |
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| Net income |
$ | 145,808 | $ | 97,828 | $ | 270,804 | $ | 166,473 | ||||||||
| Foreign currency translation adjustments |
6,331 | 4,744 | 4,973 | 1,466 | ||||||||||||
| Net realized and unrealized losses on derivatives |
(2,592 | ) | — | (3,213 | ) | — | ||||||||||
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| Comprehensive Income |
$ | 149,547 | $ | 102,572 | $ | 272,564 | $ | 167,939 | ||||||||
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SCHEDULE 2
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| September 28, | March 30, | September 29, | ||||||||||
| 2013 | 2013 | 2012 | ||||||||||
| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 618,841 | $ | 472,511 | $ | 312,244 | ||||||
| Receivables, net |
228,850 | 206,454 | 185,700 | |||||||||
| Inventories |
404,194 | 266,894 | 278,368 | |||||||||
| Deferred tax assets |
9,381 | 8,480 | 11,833 | |||||||||
| Prepaid expenses and other current assets |
84,675 | 34,850 | 99,163 | |||||||||
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| Total current assets |
1,345,941 | 989,189 | 887,308 | |||||||||
| Property and equipment, net |
284,580 | 242,113 | 194,114 | |||||||||
| Intangible assets, net |
36,316 | 20,980 | 13,533 | |||||||||
| Goodwill |
14,005 | 14,005 | 14,005 | |||||||||
| Deferred tax assets |
7,777 | 4,389 | 3,158 | |||||||||
| Other assets |
19,155 | 18,889 | 7,366 | |||||||||
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| Total assets |
$ | 1,707,774 | $ | 1,289,565 | $ | 1,119,484 | ||||||
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| Liabilities and Shareholders’ Equity |
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| Current liabilities |
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| Revolving line of credit |
$ | — | $ | — | $ | 11,616 | ||||||
| Accounts payable |
119,420 | 82,977 | 87,410 | |||||||||
| Accrued payroll and payroll related expenses |
36,746 | 38,642 | 141,981 | |||||||||
| Accrued income taxes |
7,588 | 9,074 | 3,801 | |||||||||
| Accrued expenses and other current liabilities |
54,444 | 33,555 | 32,281 | |||||||||
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| Total current liabilities |
218,198 | 164,248 | 277,089 | |||||||||
| Deferred rent |
69,976 | 56,986 | 49,583 | |||||||||
| Deferred tax liabilities |
19,010 | 13,163 | 8,872 | |||||||||
| Other long-term liabilities |
14,293 | 7,922 | 5,962 | |||||||||
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| Total liabilities |
321,477 | 242,319 | 341,506 | |||||||||
| Commitments and contingencies |
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| Shareholders’ equity |
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| Ordinary shares, no par value; 650,000,000 shares authorized, and 203,846,931 shares issued and outstanding at September 28, 2013, 201,454,408 shares issued and outstanding at March 30, 2013 and 199,746,220 shares issued and outstanding at September 29, 2012 |
— | — | — | |||||||||
| Additional paid-in capital |
490,941 | 424,454 | 382,123 | |||||||||
| Accumulated other comprehensive loss |
(1,701 | ) | (3,461 | ) | 731 | |||||||
| Retained earnings |
897,057 | 626,253 | 395,124 | |||||||||
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| Total shareholders’ equity |
1,386,297 | 1,047,246 | 777,978 | |||||||||
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| Total liabilities and shareholders’ equity |
$ | 1,707,774 | $ | 1,289,565 | $ | 1,119,484 | ||||||
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SCHEDULE 3
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED SEGMENT DATA
(In thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenue by Region: |
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| North America (U.S. and Canada) |
$ | 618,277 | $ | 471,424 | $ | 1,169,831 | $ | 848,573 | ||||||||
| Europe |
114,049 | 56,651 | 195,528 | 90,038 | ||||||||||||
| Other Regions |
7,977 | 4,860 | 15,803 | 9,189 | ||||||||||||
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| Total Revenue: |
$ | 740,303 | $ | 532,935 | $ | 1,381,162 | $ | 947,800 | ||||||||
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| Revenue by Segment: |
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| Net sales: Retail |
$ | 355,573 | $ | 242,280 | $ | 681,245 | $ | 457,284 | ||||||||
| Wholesale |
351,871 | 270,785 | 642,447 | 453,151 | ||||||||||||
| Licensing |
32,859 | 19,870 | 57,470 | 37,365 | ||||||||||||
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| Total Revenue: |
$ | 740,303 | $ | 532,935 | $ | 1,381,162 | $ | 947,800 | ||||||||
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| Income from Operations: |
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| Retail |
$ | 103,133 | $ | 68,436 | $ | 206,247 | $ | 128,315 | ||||||||
| Wholesale |
98,531 | 77,399 | 179,577 | 118,117 | ||||||||||||
| Licensing |
19,796 | 12,093 | 33,198 | 23,439 | ||||||||||||
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| Total Income from Operations |
$ | 221,460 | $ | 157,928 | $ | 419,022 | $ | 269,871 | ||||||||
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