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| 8-K - 8-K - Capri Holdings Ltd | d668976d8k.htm |
Exhibit 99.1
Michael Kors Holdings Limited Announces Third Quarter Fiscal 2014 Results
Third Quarter Total Revenue Increased 59.0%; Comparable Store Sales Increased 27.8%
Third Quarter Reported Diluted EPS Increased 73.4% to $1.11
Hong Kong — February 4, 2014 — Michael Kors Holdings Limited (NYSE:KORS) (the “Company”), a global luxury lifestyle brand, today announced its financial results for its fiscal 2014 third quarter ended December 28, 2013.
John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “Michael Kors enjoyed an outstanding holiday season, as global brand awareness continued to drive strong demand for our luxury product. Comparable stores sales increased 28% which exceeded our expectation and represents our 31st consecutive quarter of growth. We believe that our consistently strong performance is attributable to the creative vision of Michael Kors and his talented design team as well as the distinctive jet-set in-store experience that we provide in both our retail stores and our shop-in-shops. We remain very excited about our future growth prospects as Michael Kors continues to gain momentum as a global luxury lifestyle brand.”
For the third quarter ended December 28, 2013:
| • | Total revenue increased 59.0% to $1.0 billion from $636.8 million in the third quarter of fiscal 2013. |
| • | Retail net sales increased 51.3% to $503.4 million driven by a 27.8% increase in comparable store sales and 98 net new store openings since the end of the third quarter of fiscal 2013. Wholesale net sales increased 68.2% to $461.4 million and licensing revenue increased 59.0% to $47.4 million. |
| • | Gross profit increased 61.6% to $619.5 million, and as a percentage of total revenue increased to 61.2% compared to 60.2% in the third quarter of fiscal 2013. |
| • | Income from operations was $343.2 million, or 33.9% as a percentage of total revenue, as compared to $204.8 million, or 32.2% as a percentage of total revenue, for the third quarter of fiscal 2013. |
| • | Net income was $229.6 million, or $1.11 per diluted share, based on 206.1 million weighted average diluted shares outstanding. Net income for the third quarter of fiscal 2013 was $130.0 million, or $0.64 per diluted share, based on 202.8 million weighted average diluted shares outstanding. |
| • | At December 28, 2013, the Company operated 395 retail stores, including concessions, compared to 297 retail stores, including concessions, at the end of the same prior-year period. The Company had 138 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 533 Michael Kors stores worldwide at the end of the third quarter of fiscal 2014. |
Mr. Idol continued, “Our results reflect broad-based strength with significant revenue growth across our retail, wholesale and licensing segments as well as in our North American and international markets. Revenue in North America grew 51% and comparable store sales increased 24%, with performance driven primarily by accessories and watch offerings. In addition, our North America wholesale segment generated another quarter of strong sales growth, particularly in our accessories and footwear categories, and we continued to benefit from shop-in-shop conversions in department stores. In Europe, revenue grew 144% in the third quarter, with exceptional comparable store sales growth of 73%, which we believe was driven by growing brand awareness and demand across regions. Lastly, in our licensing segment, revenue increased 59%, with continued demand in watches and eyewear. Looking ahead, we remain confident that Michael Kors’ distinctive positioning in the global luxury market will enable us to achieve strong long term growth for our shareholders.”
For the first nine months ended December 28, 2013:
| • | Total revenue for the first nine months increased 51.0% to $2.4 billion from $1.6 billion in the same period of fiscal 2013. |
| • | Retail net sales increased 50.0% to $1.2 billion. Comparable store sales increased 26.2%. Wholesale net sales increased 51.7% to $1.1 billion and licensing revenue increased 56.1% to $104.9 million. |
| • | Gross profit for the first nine months increased 54.3% to $1.5 billion, and as a percentage of total revenue increased to 61.3% as compared to 60.0% in the same period of fiscal 2013. |
| • | Income from operations for the first nine months was $762.3 million and as a percentage of total revenue was 31.8%. For the same period of fiscal 2013, income from operations was $474.7 million, or 30.0% as a percentage of total revenue. |
| • | Net income for the first nine months was $500.4 million, or $2.44 per diluted share, based on 205.2 million weighted average diluted shares outstanding. Net income for the same period of fiscal 2013 was $296.5 million, or $1.48 per diluted share, based on 200.8 million weighted average diluted shares outstanding. |
Outlook
For the fourth quarter of fiscal 2014, the Company expects total revenue to be in the range of $790 million to $800 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 $0.63 to $0.65 for the fourth quarter of fiscal 2014. This assumes 206.8 million weighted average diluted shares outstanding and a tax rate of approximately 33.5%.
For fiscal 2014, the Company now expects total revenue to be in the range of $3.18 billion to $3.19 billion. This assumes a comparable store sales increase of approximately 25%. Diluted earnings per share are now expected to be in the range of $3.07 to $3.09 for fiscal 2014. This assumes 205.6 million weighted average diluted shares outstanding and a tax rate of approximately 34.0%.
Conference Call Information
A conference call to discuss third quarter results is scheduled for today, February 4, 2014 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 2883785. 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 | Nine Months Ended | |||||||||||||||
| December 28, | December 29, | December 28, | December 29, | |||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net sales |
$ | 964,787 | $ | 606,943 | $ | 2,288,479 | $ | 1,517,378 | ||||||||
| Licensing revenue |
47,442 | 29,835 | 104,912 | 67,200 | ||||||||||||
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| Total revenue |
1,012,229 | 636,778 | 2,393,391 | 1,584,578 | ||||||||||||
| Cost of goods sold |
392,731 | 253,327 | 926,747 | 634,227 | ||||||||||||
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| Gross profit |
619,498 | 383,451 | 1,466,644 | 950,351 | ||||||||||||
| Total operating expenses |
276,258 | 178,612 | 704,382 | 475,641 | ||||||||||||
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| Income from operations |
343,240 | 204,839 | 762,262 | 474,710 | ||||||||||||
| Interest expense, net |
109 | 311 | 409 | 1,301 | ||||||||||||
| Foreign currency loss (gain) |
3 | 1,487 | 279 | 837 | ||||||||||||
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| Income before provision for income taxes |
343,128 | 203,041 | 761,574 | 472,572 | ||||||||||||
| Provision for income taxes |
113,485 | 73,013 | 261,127 | 176,071 | ||||||||||||
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| Net income |
$ | 229,643 | $ | 130,028 | $ | 500,447 | $ | 296,501 | ||||||||
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| Weighted average ordinary shares outstanding: |
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| Basic |
203,175,380 | 199,291,480 | 202,314,813 | 195,468,623 | ||||||||||||
| Diluted |
206,088,062 | 202,817,811 | 205,192,959 | 200,800,410 | ||||||||||||
| Net income per ordinary share: |
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| Basic |
$ | 1.13 | $ | 0.65 | $ | 2.47 | $ | 1.52 | ||||||||
| Diluted |
$ | 1.11 | $ | 0.64 | $ | 2.44 | $ | 1.48 | ||||||||
| Statements of Comprehensive Income: |
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| Net income |
$ | 229,643 | $ | 130,028 | $ | 500,447 | $ | 296,501 | ||||||||
| Foreign currency translation adjustments |
(1,745 | ) | 191 | 3,228 | 1,657 | |||||||||||
| Net realized and unrealized losses on derivatives |
(496 | ) | (367 | ) | (3,709 | ) | (367 | ) | ||||||||
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| Comprehensive income |
$ | 227,402 | $ | 129,852 | $ | 499,966 | $ | 297,791 | ||||||||
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SCHEDULE 2
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| December 28, 2013 |
March 30, 2013 |
December 29, 2012 |
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| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 828,341 | $ | 472,511 | $ | 405,776 | ||||||
| Receivables, net |
292,812 | 206,454 | 172,658 | |||||||||
| Inventories |
431,564 | 266,894 | 290,154 | |||||||||
| Deferred tax assets |
10,790 | 8,480 | 13,852 | |||||||||
| Prepaid expenses and other current assets |
36,722 | 34,850 | 44,021 | |||||||||
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| Total current assets |
1,600,229 | 989,189 | 926,461 | |||||||||
| Property and equipment, net |
321,542 | 242,113 | 217,549 | |||||||||
| Intangible assets, net |
42,098 | 20,980 | 16,788 | |||||||||
| Goodwill |
14,005 | 14,005 | 14,005 | |||||||||
| Deferred tax assets |
9,633 | 4,389 | 1,432 | |||||||||
| Other assets |
19,456 | 18,889 | 11,420 | |||||||||
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| Total assets |
$ | 2,006,963 | $ | 1,289,565 | $ | 1,187,655 | ||||||
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| Liabilities and Shareholders’ Equity |
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| Current liabilities |
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| Revolving line of credit |
$ | — | $ | — | $ | — | ||||||
| Accounts payable |
145,363 | 82,977 | 105,445 | |||||||||
| Accrued payroll and payroll related expenses |
42,416 | 38,642 | 33,121 | |||||||||
| Accrued income taxes |
11,645 | 9,074 | 6,344 | |||||||||
| Accrued expenses and other current liabilities |
75,829 | 33,555 | 47,869 | |||||||||
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| Total current liabilities |
275,253 | 164,248 | 192,779 | |||||||||
| Deferred rent |
72,293 | 56,986 | 51,303 | |||||||||
| Deferred tax liabilities |
20,014 | 13,163 | 11,871 | |||||||||
| Other long-term liabilities |
15,453 | 7,922 | 7,499 | |||||||||
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| Total liabilities |
383,013 | 242,319 | 263,452 | |||||||||
| Commitments and contingencies |
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| Shareholders’ equity |
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| Ordinary shares, no par value; 650,000,000 shares authorized, and 203,882,679 shares issued and outstanding at December 28, 2013, 201,454,408 shares issued and outstanding at March 30, 2013, and 200,274,090 shares issued and outstanding at December 29, 2012 |
— | — | — | |||||||||
| Treasury shares, at cost (29,765 shares at December 28, 2013) |
(2,447 | ) | — | — | ||||||||
| Additional paid-in capital |
503,639 | 424,454 | 398,496 | |||||||||
| Accumulated other comprehensive (loss) gain |
(3,942 | ) | (3,461 | ) | 555 | |||||||
| Retained earnings |
1,126,700 | 626,253 | 525,152 | |||||||||
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| Total shareholders’ equity |
1,623,950 | 1,047,246 | 924,203 | |||||||||
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| Total liabilities and shareholders’ equity |
$ | 2,006,963 | $ | 1,289,565 | $ | 1,187,655 | ||||||
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SCHEDULE 3
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED SEGMENT DATA
(In thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 28, 2013 |
December 29, 2012 |
December 28, 2013 |
December 29, 2012 |
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| Revenue by Region: |
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| North America (U.S. and Canada) |
$ | 862,619 | $ | 573,115 | $ | 2,032,450 | $ | 1,421,688 | ||||||||
| Europe |
140,294 | 57,604 | 335,822 | 147,642 | ||||||||||||
| Other Regions |
9,316 | 6,059 | 25,119 | 15,248 | ||||||||||||
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| Total Revenue: |
$ | 1,012,229 | $ | 636,778 | $ | 2,393,391 | $ | 1,584,578 | ||||||||
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| Revenue by Segment: |
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| Net sales :Retail |
$ | 503,380 | $ | 332,641 | $ | 1,184,625 | $ | 789,925 | ||||||||
| Wholesale |
461,407 | 274,302 | 1,103,854 | 727,453 | ||||||||||||
| Licensing |
47,442 | 29,835 | 104,912 | 67,200 | ||||||||||||
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| Total Revenue: |
$ | 1,012,229 | $ | 636,778 | $ | 2,393,391 | $ | 1,584,578 | ||||||||
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| Income from Operations: |
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| Retail |
$ | 171,281 | $ | 109,012 | $ | 377,528 | $ | 237,327 | ||||||||
| Wholesale |
140,685 | 76,790 | 320,262 | 194,907 | ||||||||||||
| Licensing |
31,274 | 19,037 | 64,472 | 42,476 | ||||||||||||
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| Total Income from Operations |
$ | 343,240 | $ | 204,839 | $ | 762,262 | $ | 474,710 | ||||||||
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