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| 8-K - 8-K - Capri Holdings Ltd | d815130d8k.htm |
Exhibit 99.1
MICHAEL KORS
Michael Kors Holdings Limited Announces Second Quarter Fiscal 2015 Results
Second Quarter Total Revenue Increased 42.7%; Comparable Store Sales Increased 16.4%
Second Quarter Reported Diluted EPS Increased 40.8% to $1.00
Company Announces $1 Billion Share Repurchase Program
London — November 4, 2014 — Michael Kors Holdings Limited (NYSE:KORS) (the “Company”), a global luxury lifestyle brand, today announced its financial results for the second quarter ended September 27, 2014.
For the second quarter ended September 27, 2014:
| • | Total revenue increased 42.7% to $1.1 billion from $740.3 million in the second quarter of fiscal 2014. |
| • | Retail net sales increased 39.4% to $495.6 million driven by 121 net new store openings since the end of the second quarter of fiscal 2014 and a 16.4% increase in comparable store sales. Wholesale net sales increased 46.1% to $514.1 million and licensing revenue increased 42.8% to $46.9 million. |
| • | Revenue in North America increased 29.8% to $802.2 million, with a 10.8% increase in comparable store sales. European revenue grew 108.6% to $237.9 million, with comparable store sales increasing 41.1%. Revenue in Japan increased 106.3% to $16.5 million, with comparable store sales growth of 52.9%. |
| • | Gross profit increased 43.4% to $645.0 million, and as a percentage of total revenue increased to 61.0% compared to 60.8% in the second quarter of fiscal 2014. |
| • | Income from operations was $305.6 million, or 28.9% as a percentage of total revenue, as compared to $221.5 million, or 29.9% as a percentage of total revenue, for the second quarter of fiscal 2014. |
| • | Net income was $207.0 million, or $1.00 per diluted share, based on 207.4 million weighted average diluted shares outstanding. Net income for the second quarter of fiscal 2014 was $145.8 million, or $0.71 per diluted share, based on 205.2 million weighted average diluted shares outstanding. |
| • | At September 27, 2014, the Company operated 473 retail stores, including concessions, compared to 352 retail stores, including concessions, at the end of the same prior-year period. The Company had 176 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 649 Michael Kors stores worldwide at the end of the second quarter of fiscal 2015. |
John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “Our strong second quarter results reflect our fashion leadership, aspirational product offering and jet-set luxury image that continue to resonate with customers globally. Once again, we delivered exceptional performance with both revenue and earnings per share growth in excess of 40%. This ongoing momentum reflects strength across our operating segments and geographies as we continue to expand our presence globally.”
For the first six months ended September 27, 2014:
| • | Total revenue for the first six months increased 43.1% to $2.0 billion from $1.4 billion in the same period of fiscal 2014. |
MICHAEL KORS
| • | Retail net sales increased 43.2% to $975.8 million. Comparable store sales increased 20.2%. Wholesale net sales increased 43.3% to $920.9 million and licensing revenue increased 37.6% to $79.1 million. |
| • | Gross profit for the first six months increased 43.6% to $1.2 billion, and as a percentage of total revenue increased to 61.6% as compared to 61.3% in the same period of fiscal 2014. |
| • | Income from operations for the first six months was $582.3 million and as a percentage of total revenue was 29.5%. For the same period of fiscal 2014, income from operations was $419.0 million, or 30.3% as a percentage of total revenue. |
| • | Net income for the first six months was $394.7 million, or $1.90 per diluted share, based on 207.3 million weighted average diluted shares outstanding. Net income for the same period of fiscal 2014 was $270.8 million, or $1.32 per diluted share, based on 205.5 million weighted average diluted shares outstanding. |
South Korea Licensed Business
The Company also announced that it will take direct control of the Michael Kors business in South Korea from its current partner, Simone FC, by the early part of calendar 2016. The current distribution in this region includes 37 locations. The Company will focus on building the infrastructure and developing its expansion strategy for South Korea in order to position this business for long term growth.
Share Repurchase Program
The Company’s Board of Directors has authorized a $1 billion share repurchase program. Share repurchases may be made in open market or privately negotiated transactions over a two year period, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy, and other relevant factors. The program may be suspended or discontinued at any time.
Joseph B. Parsons, Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer, stated, “We are pleased to initiate a share repurchase program, which reflects the Board and management’s confidence in our ability to achieve our long term growth objectives and generate strong free cash flow. This repurchase program underscores our commitment to returning value to shareholders, while maintaining the financial flexibility to strategically invest in our business.”
Outlook
For the third quarter of fiscal 2015, the Company expects total revenue to be in the range of $1.27 billion to $1.30 billion. This assumes a low double digit comparable store sales increase. Diluted earnings per share are expected to be in the range of $1.31 to $1.34 for the third quarter of fiscal 2015. This assumes 208.3 million weighted average diluted shares outstanding and a tax rate of approximately 32.5%.
For fiscal 2015, the Company now expects total revenue to be in the range of $4.3 billion to $4.4 billion. This assumes a comparable store sales increase in the mid teens. Diluted earnings per share are now expected to be in the range of $4.13 to $4.18 for fiscal 2015. This assumes 208.0 million weighted average diluted shares outstanding and a tax rate of approximately 32.2%.
MICHAEL KORS
Conference Call Information
A conference call to discuss second quarter results is scheduled for today, November 4, 2014 at 8:00 a.m. ET. A replay of the call will be available today at 11:00 a.m. ET; 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 6121193. 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 29, 2014 (File No. 001-35368), filed on May 28, 2014 with the U.S. Securities and Exchange Commission.
CONTACTS:
Investor Relations:
Michael Kors Holdings Limited
Krystyna Lack - VP, Treasurer
201-691-6133
InvestorRelations@MichaelKors.com
Or
ICR, Inc.
Jean Fontana
203-682-1214
jean.fontana@icrinc.com
Media:
ICR, Inc.
Alecia Pulman
646-277-1231
KorsPR@icrinc.com
MICHAEL KORS
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 27, | September 28, | September 27, | September 28, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales |
$ | 1,009,669 | $ | 707,444 | $ | 1,896,706 | $ | 1,323,692 | ||||||||
| Licensing revenue |
46,936 | 32,859 | 79,053 | 57,470 | ||||||||||||
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| Total revenue |
1,056,605 | 740,303 | 1,975,759 | 1,381,162 | ||||||||||||
| Cost of goods sold |
411,578 | 290,428 | 759,099 | 534,016 | ||||||||||||
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| Gross profit |
645,027 | 449,875 | 1,216,660 | 847,146 | ||||||||||||
| Total operating expenses |
339,469 | 228,415 | 634,331 | 428,124 | ||||||||||||
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| Income from operations |
305,558 | 221,460 | 582,329 | 419,022 | ||||||||||||
| Other income |
(2,051 | ) | — | (1,546 | ) | — | ||||||||||
| Interest expense, net |
72 | 130 | 31 | 300 | ||||||||||||
| Foreign currency loss |
3,440 | 18 | 3,745 | 276 | ||||||||||||
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| Income before provision for income taxes |
304,097 | 221,312 | 580,099 | 418,446 | ||||||||||||
| Provision for income taxes |
97,107 | 75,504 | 185,393 | 147,642 | ||||||||||||
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| Net income |
$ | 206,990 | $ | 145,808 | $ | 394,706 | $ | 270,804 | ||||||||
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| Weighted average ordinary shares outstanding: |
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| Basic |
204,464,952 | 202,560,870 | 204,107,262 | 202,686,313 | ||||||||||||
| Diluted |
207,432,250 | 205,154,692 | 207,304,247 | 205,547,191 | ||||||||||||
| Net income per ordinary share: |
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| Basic |
$ | 1.01 | $ | 0.72 | $ | 1.93 | $ | 1.34 | ||||||||
| Diluted |
$ | 1.00 | $ | 0.71 | $ | 1.90 | $ | 1.32 | ||||||||
| Statements of Comprehensive Income: |
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| Net income |
$ | 206,990 | $ | 145,808 | $ | 394,706 | $ | 270,804 | ||||||||
| Foreign currency translation adjustments |
(27,671 | ) | 6,331 | (24,604 | ) | 4,973 | ||||||||||
| Net realized and unrealized gains (losses) on derivatives |
9,094 | (2,592 | ) | 10,558 | (3,213 | ) | ||||||||||
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| Comprehensive income |
$ | 188,413 | $ | 149,547 | $ | 380,660 | $ | 272,564 | ||||||||
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MICHAEL KORS
SCHEDULE 2
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| September 27, 2014 |
March 29, 2014 |
September 28, 2013 |
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| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 1,012,393 | $ | 955,145 | $ | 618,841 | ||||||
| Receivables, net |
346,822 | 314,055 | 228,850 | |||||||||
| Inventories |
619,296 | 426,938 | 404,194 | |||||||||
| Deferred tax assets |
29,204 | 30,539 | 9,381 | |||||||||
| Prepaid expenses and other current assets |
125,658 | 50,492 | 84,675 | |||||||||
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| Total current assets |
2,133,373 | 1,777,169 | 1,345,941 | |||||||||
| Property and equipment, net |
453,836 | 350,678 | 284,580 | |||||||||
| Intangible assets, net |
53,278 | 48,034 | 36,316 | |||||||||
| Goodwill |
14,005 | 14,005 | 14,005 | |||||||||
| Deferred tax assets |
6,423 | 3,662 | 7,777 | |||||||||
| Other assets |
28,515 | 23,425 | 19,155 | |||||||||
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| Total assets |
$ | 2,689,430 | $ | 2,216,973 | $ | 1,707,774 | ||||||
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| Liabilities and Shareholders’ Equity |
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| Current liabilities |
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| Accounts payable |
$ | 179,079 | $ | 131,953 | 119,420 | |||||||
| Accrued payroll and payroll related expenses |
46,733 | 54,703 | 36,746 | |||||||||
| Accrued income taxes |
19,361 | 47,385 | 7,588 | |||||||||
| Accrued expenses and other current liabilities |
80,692 | 74,329 | 54,444 | |||||||||
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| Total current liabilities |
325,865 | 308,370 | 218,198 | |||||||||
| Deferred rent |
93,434 | 76,785 | 69,976 | |||||||||
| Deferred tax liabilities |
3,905 | 5,887 | 19,010 | |||||||||
| Other long-term liabilities |
21,097 | 19,800 | 14,293 | |||||||||
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| Total liabilities |
444,301 | 410,842 | 321,477 | |||||||||
| Commitments and contingencies |
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| Shareholders’ equity |
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| Ordinary shares, no par value; 650,000,000 shares authorized, and 205,797,551 shares issued and outstanding at September 27, 2014, 204,291,345 shares issued and outstanding at March 29, 2014, and 203,846,931 shares issued and outstanding at September 28, 2013 |
— | — | — | |||||||||
| Treasury shares, at cost (40,787 shares at September 27, 2014, and 29,765 at March 29, 2014) |
(3,484 | ) | (2,447 | ) | — | |||||||
| Additional paid-in capital |
586,588 | 527,213 | 490,941 | |||||||||
| Accumulated other comprehensive loss |
(20,419 | ) | (6,373 | ) | (1,701 | ) | ||||||
| Retained earnings |
1,682,444 | 1,287,738 | 897,057 | |||||||||
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| Total shareholders’ equity |
2,245,129 | 1,806,131 | 1,386,297 | |||||||||
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| Total liabilities and shareholders’ equity |
$ | 2,689,430 | $ | 2,216,973 | $ | 1,707,774 | ||||||
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MICHAEL KORS
SCHEDULE 3
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED SEGMENT DATA
(Dollars in thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| September 27, 2014 |
September 28, 2013 |
September 27, 2014 |
September 28, 2013 |
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| Revenue by Segment and Region: |
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| Retail net sales: North America |
$ | 370,999 | $ | 294,368 | $ | 744,558 | $ | 569,738 | ||||||||
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Europe |
108,125 | 53,228 | 200,040 | 95,704 | ||||||||||||
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Japan |
16,455 | 7,977 | 31,223 | 15,803 | ||||||||||||
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| Total Retail Net Sales |
495,579 | 355,573 | 975,821 | 681,245 | ||||||||||||
| Wholesale net sales: North America |
400,678 | 291,050 | 727,721 | 542,623 | ||||||||||||
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Europe |
113,412 | 60,821 | 193,164 | 99,824 | ||||||||||||
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| Total Wholesale Net Sales |
514,090 | 351,871 | 920,885 | 642,447 | ||||||||||||
| Licensing revenue: North America |
30,549 | 32,859 | 48,836 | 57,470 | ||||||||||||
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Europe |
16,387 | — | 30,217 | — | ||||||||||||
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| Total Licensing Revenue |
46,936 | 32,859 | 79,053 | 57,470 | ||||||||||||
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| Total Revenue |
$ | 1,056,605 | $ | 740,303 | $ | 1,975,759 | $ | 1,381,162 | ||||||||
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| Income from Operations: |
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| Retail |
$ | 127,334 | $ | 103,133 | $ | 270,023 | $ | 206,247 | ||||||||
| Wholesale |
156,672 | 98,531 | 274,324 | 179,577 | ||||||||||||
| Licensing |
21,552 | 19,796 | 37,982 | 33,198 | ||||||||||||
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| Total Income from Operations |
$ | 305,558 | $ | 221,460 | $ | 582,329 | $ | 419,022 | ||||||||
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| Operating Margin: |
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| Retail |
25.7 | % | 29.0 | % | 27.7 | % | 30.3 | % | ||||||||
| Wholesale |
30.5 | % | 28.0 | % | 29.8 | % | 28.0 | % | ||||||||
| Licensing |
45.9 | % | 60.2 | % | 48.0 | % | 57.8 | % | ||||||||
| Total Operating Margin |
28.9 | % | 29.9 | % | 29.5 | % | 30.3 | % | ||||||||
| As of | ||||||||||||||||
| September 27, 2014 | September 28, 2013 | |||||||||||||||
| Store Count | Square Footage | Store Count | Square Footage | |||||||||||||
| Store Count and Square Footage by Region: |
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| North America |
320 | 872,282 | 264 | 670,444 | ||||||||||||
| Europe |
111 | 251,884 | 57 | 115,118 | ||||||||||||
| Japan |
42 | 51,980 | 31 | 38,865 | ||||||||||||
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| Total |
473 | 1,176,146 | 352 | 824,427 | ||||||||||||
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