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MICHAEL KORS HOLDINGS LIMITED
Exhibit 99.1
Michael Kors Holdings Limited Announces Third Quarter Fiscal 2018 Results
Exceeds Third Quarter Guidance; Raises Full Year Outlook
London — February 7, 2018 — Michael Kors Holdings Limited (NYSE:KORS) (the “Company,” "MKHL"), a global fashion luxury group, today announced its financial results for the fiscal 2018 third quarter ended December 30, 2017. Earnings per diluted share were $1.42 on a reported basis. On an adjusted basis, earnings per diluted share were $1.77, an increase of 7.9% compared to the prior year.
Third Quarter Fiscal 2018 Highlights
• | Results exceeded guidance, with better than expected performance from both the Michael Kors and Jimmy Choo brands. |
• | Successfully completed the integration of Jimmy Choo into Michael Kors Holdings Limited. |
• | Continued to make progress on Michael Kors Runway 2020 strategic plan. |
◦ | Elevated brand position through innovative fashion luxury offering. |
◦ | Accessories sales were better than expected as new product introductions infused with glamor and unique fashion elements resonated with consumers. |
◦ | Grew women’s footwear and ready-to-wear businesses as consumers embraced feminine and embellished holiday offerings. |
◦ | Comparable store sales exceeded expectations and favorable response to new product innovation combined with reduced promotional activity drove higher average unit retails in North America digital flagships and lifestyle stores. |
John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “We are pleased with our third quarter performance, which delivered better than expected results and saw the successful integration of Jimmy Choo into our luxury group. The Michael Kors brand continued to make progress on Runway 2020 initiatives across product innovation, brand engagement and customer experience. Our innovative fashion luxury product offerings for the holiday season created excitement among consumers. At Jimmy Choo, we continued to deliver glamorous luxury product and engaging brand communications, which helped drive revenue during the quarter.”
Financial Results
The Company’s results are reported in this press release on both a GAAP and an adjusted, non-GAAP basis. A reconciliation of GAAP to non-GAAP financial information is provided at the end of this press release.
For the third quarter ended December 30, 2017:
• | Total revenue increased 6.5% to $1.44 billion, including a $114.7 million contribution from Jimmy Choo, which the Company owned for two months of the quarter. On a constant currency basis, total revenue increased 4.6%. |
• | MK Retail revenue increased 1.1% to $846.3 million driven in large part by 32 net new store openings since the end of the third quarter of fiscal 2017. Comparable sales decreased 3.2%, with better than anticipated performance in the Americas and Europe during the Holiday season. On a constant currency basis, retail net sales decreased 1.0%, and comparable sales decreased 5.2%. |
• | MK Wholesale revenue decreased 8.9% to $430.8 million and on a constant currency basis decreased 10.5%, driven by a strategic reduction in inventory levels in the channel. |
• | MK Licensing revenue increased 12.3% to $48.3 million. |
MICHAEL KORS HOLDINGS LIMITED
• | Gross profit increased 9.7% to $884.0 million, and as a percentage of total revenue was 61.4%. Adjusted gross profit increased 9.9% to $885.6 million, and as a percentage of total revenue was 61.5%. This compares to 59.6% in the third quarter of fiscal 2017. The year-over-year growth was largely driven by improved MK Retail gross margin, favorable Michael Kors channel mix and the inclusion of the higher margin Jimmy Choo business, which contributed 20 basis points, partially offset by the expected decline in MK Wholesale gross margin. Foreign currency translation and transaction favorably impacted gross profit margin by approximately 10 basis points. |
• | Income from operations was $313.5 million, or 21.8% as a percentage of total revenue, including a $5.7 million contribution from Jimmy Choo after amortization of non-cash purchase accounting adjustments and transaction and transition related costs. Income from operations was $341.9 million, or 25.3% as a percentage of total revenue, for the third quarter of fiscal 2017. |
• | Adjusted income from operations was $345.7 million, or 24.0% as a percentage of total revenue, reflecting a $15.7 million contribution from Jimmy Choo. This compares to $342.4 million, or 25.3% as a percentage of total revenue, for the same period in fiscal 2017. |
• | Net income attributable to MKHL was $219.4 million, or $1.42 per diluted share, based on a 21.2% tax rate and 154.6 million weighted average diluted shares outstanding. Net income attributable to MKHL for the third quarter of fiscal 2017 was $271.3 million, or $1.64 per diluted share, based on a 20.6% tax rate and 165.2 million weighted average diluted shares outstanding. |
• | Adjusted net income attributable to MKHL was $273.4 million, or $1.77 per diluted share. This compares to $271.6 million, or $1.64 per diluted share, for the third quarter of fiscal 2017. |
• | At December 30, 2017, Michael Kors operated 848 retail stores, including concessions, and an additional 150 retail stores, including concessions, were operated through licensing partners. Including licensed locations, there were 998 Michael Kors stores worldwide at the end of the third quarter of fiscal 2018. |
• | At December 30, 2017, Jimmy Choo operated 179 retail stores, including concessions, and an additional 55 retail stores, including concessions, were operated through licensing partners. Including licensed locations, there were 234 Jimmy Choo stores worldwide at the end of the third quarter of fiscal 2018. |
Balance Sheet
As of December 30, 2017, debt on the balance sheet totaled $992.5 million after repaying $450.0 million of term loans. Currently, the Company has approximately $1.00 billion available for future borrowings under its revolving credit facilities. Inventory at December 30, 2017 was $677.2 million, including $117.1 million for Jimmy Choo and $560.1 for Michael Kors. Inventory at the end of the third quarter of fiscal 2017 was $586.2 million. Inventory for Michael Kors was down 4.5% as compared to the prior year.
Outlook
For the fourth quarter of fiscal 2018, the Company expects total revenue to be between $1.11 billion and $1.13 billion, including between $110 million and $115 million of incremental Jimmy Choo revenue. Comparable sales for Michael Kors are expected to decline in the low-single digits. The Company expects operating margin to be approximately 10.0%. Diluted earnings per share are expected to be in the range of $0.50 to $0.55, including the dilution from Jimmy Choo of approximately $0.07. This assumes approximately 155 million weighted average diluted shares outstanding and a tax rate of approximately 21.0%.
For fiscal 2018, the Company expects total revenue to be approximately $4.66 billion, including between $225 million and $230 million of incremental Jimmy Choo revenue. Comparable sales for Michael Kors are expected to decline in the mid-single digits. The Company expects operating margin to be approximately 18.0%. Diluted earnings per share are expected to be in the range of $4.40 to $4.45, with no incremental impact from Jimmy Choo. This assumes approximately 155 million weighted average diluted shares outstanding and a tax rate of approximately 18.0%.
Conference Call Information
MICHAEL KORS HOLDINGS LIMITED
A conference call to discuss third quarter results is scheduled for today, February 7, 2018 at 8:30 a.m. ET. A live webcast of the conference call will be available on the Company’s investor relations website, www.investors.michaelkors.com. In addition, a replay will be available shortly after the conclusion of the call and remain available until February 14, 2018. To access the telephone replay, listeners should dial 1-844-512-2921 or 1-412-317-6671 for international callers. The access code for the replay is 2891593. A replay of the webcast will also be available within two hours of the conclusion of the call and will remain on the website for 90 days.
Use of Non-GAAP Financial Measures
Constant currency effects are non-GAAP financial measures, which are provided to supplement our reported operating results to facilitate comparisons of our operating results and trends in our business, excluding the effects of foreign currency rate fluctuations. Because we are a global Company, foreign currency exchange rates may have a significant effect on our reported results. We calculate constant currency measures and the related foreign currency impacts by translating the current-year’s reported amounts into comparable amounts using prior year’s foreign exchange rates for each currency. All constant currency performance measures discussed below should be considered a supplement to and not in lieu of our operating performance measures calculated in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Additionally, this earnings release includes certain non-GAAP financial measures relating to certain one-time costs associated with the Jimmy Choo acquisition, the acquisition of the Greater China licensee and restructuring and non-cash impairment charges primarily associated with underperforming retail stores. The Company uses non-GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. The Company believes that excluding non-recurring items helps its management and investors compare operating performance based on its ongoing operations. While the Company considers the non-GAAP measures to be useful supplemental measures in analyzing its results, they are not intended to replace, nor act as a substitute for, any amounts presented in its consolidated financial statements prepared in conformity with U.S. GAAP and may be different from non-GAAP measures reported by other companies.
About Michael Kors Holdings Limited
Michael Kors Holdings Limited is a global fashion luxury group, consisting of iconic brands that are industry leaders in design, style and craftsmanship. Its brands cover the full spectrum of fashion luxury categories including women’s and men’s accessories, footwear and apparel as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. The company’s goal is to continue to extend the global reach of its brands while ensuring that they maintain their independence and exclusive DNA. Michael Kors Holdings Limited is publicly listed on the New York Stock Exchange under the ticker KORS.
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 April 1, 2017 (File No. 001-35368), Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2017 (File No. 001-35368) and other reports filed with the U.S. Securities and Exchange Commission.
CONTACTS:
MICHAEL KORS HOLDINGS LIMITED
Michael Kors Holdings Limited
Christina Coronios
(201) 691-6133
InvestorRelations@MichaelKors.com
ICR, Inc.
Jean Fontana
(203) 682-8200
jean.fontana@icrinc.com
Media:
ICR, Inc.
Alecia Pulman
(646) 277-1231
KorsPR@icrinc.com
MICHAEL KORS HOLDINGS LIMITED
SCHEDULE 1
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Total revenue | $ | 1,440.1 | $ | 1,352.8 | $ | 3,539.1 | $ | 3,428.9 | |||||||
Cost of goods sold | 556.1 | 547.1 | 1,389.6 | 1,387.2 | |||||||||||
Gross profit | 884.0 | 805.7 | 2,149.5 | 2,041.7 | |||||||||||
Total operating expenses | 570.5 | 463.8 | 1,487.5 | 1,309.2 | |||||||||||
Income from operations | 313.5 | 341.9 | 662.0 | 732.5 | |||||||||||
Other income, net | (0.1 | ) | (4.1 | ) | (1.0 | ) | (4.7 | ) | |||||||
Interest expense, net | 8.3 | 3.4 | 10.2 | 5.1 | |||||||||||
Foreign currency loss (gain) | 27.0 | 0.9 | (14.7 | ) | 2.2 | ||||||||||
Income before provision for income taxes | 278.3 | 341.7 | 667.5 | 729.9 | |||||||||||
Provision for income taxes | 58.9 | 70.4 | 119.9 | 151.6 | |||||||||||
Net income | 219.4 | 271.3 | 547.6 | 578.3 | |||||||||||
Less: Net loss attributable to noncontrolling interest | — | — | (0.2 | ) | (1.0 | ) | |||||||||
Net income attributable to MKHL | $ | 219.4 | $ | 271.3 | $ | 547.8 | $ | 579.3 | |||||||
Weighted average ordinary shares outstanding: | |||||||||||||||
Basic | 152,047,963 | 163,148,597 | 152,772,067 | 168,000,933 | |||||||||||
Diluted | 154,623,339 | 165,214,045 | 155,220,984 | 170,222,588 | |||||||||||
Net income per ordinary share attributable to MKHL: | |||||||||||||||
Basic | $ | 1.44 | $ | 1.66 | $ | 3.59 | $ | 3.45 | |||||||
Diluted | $ | 1.42 | $ | 1.64 | $ | 3.53 | $ | 3.40 | |||||||
MICHAEL KORS HOLDINGS LIMITED
SCHEDULE 2
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
December 30, 2017 | April 1, 2017 | December 31, 2016 | ||||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 317.1 | $ | 227.7 | $ | 368.8 | ||||||
Receivables, net | 288.0 | 265.8 | 252.4 | |||||||||
Inventories | 677.2 | 549.3 | 586.2 | |||||||||
Prepaid expenses and other current assets | 162.3 | 121.9 | 160.3 | |||||||||
Total current assets | 1,444.6 | 1,164.7 | 1,367.7 | |||||||||
Property and equipment, net | 599.4 | 591.5 | 771.0 | |||||||||
Intangible assets, net | 1,215.4 | 418.1 | 453.7 | |||||||||
Goodwill | 822.0 | 119.7 | 119.7 | |||||||||
Deferred tax assets | 64.7 | 73.3 | 20.8 | |||||||||
Other assets | 70.7 | 42.3 | 38.1 | |||||||||
Total assets | $ | 4,216.8 | $ | 2,409.6 | $ | 2,771.0 | ||||||
Liabilities and Shareholders’ Equity | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 290.2 | $ | 176.3 | $ | 214.0 | ||||||
Accrued payroll and payroll related expenses | 85.7 | 61.1 | 60.7 | |||||||||
Accrued income taxes | 68.7 | 60.3 | 47.3 | |||||||||
Short-term debt | 0.1 | 133.1 | 147.8 | |||||||||
Accrued expenses and other current liabilities | 277.4 | 135.0 | 202.0 | |||||||||
Total current liabilities | 722.1 | 565.8 | 671.8 | |||||||||
Deferred rent | 134.8 | 137.8 | 128.1 | |||||||||
Deferred tax liabilities | 217.0 | 80.0 | 89.0 | |||||||||
Long-term debt | 992.4 | — | — | |||||||||
Other long-term liabilities | 70.2 | 31.0 | 27.6 | |||||||||
Total liabilities | 2,136.5 | 814.6 | 916.5 | |||||||||
Commitments and contingencies | ||||||||||||
Shareholders’ equity | ||||||||||||
Ordinary shares, no par value; 650,000,000 shares authorized; 210,302,628 shares issued and 152,167,403 outstanding at December 30, 2017; 209,332,493 shares issued and 155,833,304 outstanding at April 1, 2017, and 209,293,238 shares issued and 162,435,864 outstanding at December 31, 2016 | — | — | — | |||||||||
Treasury shares, at cost (58,135,225 shares at December 30, 2017; 53,499,189 shares at April 1, 2017; and 46,857,374 shares at December 31, 2016) | (2,815.9 | ) | (2,654.9 | ) | (2,404.9 | ) | ||||||
Additional paid-in capital | 803.3 | 767.8 | 760.0 | |||||||||
Accumulated other comprehensive loss | (18.4 | ) | (80.6 | ) | (90.1 | ) | ||||||
Retained earnings | 4,107.9 | 3,560.3 | 3,587.1 | |||||||||
Total shareholders’ equity of MKHL | 2,076.9 | 1,592.6 | 1,852.1 | |||||||||
Noncontrolling interest | 3.4 | 2.4 | 2.4 | |||||||||
Total shareholders’ equity | 2,080.3 | 1,595.0 | 1,854.5 | |||||||||
Total liabilities and shareholders’ equity | $ | 4,216.8 | $ | 2,409.6 | $ | 2,771.0 | ||||||
MICHAEL KORS HOLDINGS LIMITED
SCHEDULE 3
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED SEGMENT DATA
($ in millions)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||||
Revenue by Segment and Region: | |||||||||||||||||
MK Retail | The Americas | $ | 558.0 | $ | 584.2 | $ | 1,335.6 | $ | 1,362.0 | ||||||||
Europe | 168.0 | 150.9 | 444.3 | 401.2 | |||||||||||||
Asia | 120.3 | 101.6 | 331.3 | 233.6 | |||||||||||||
MK Retail Revenue | 846.3 | 836.7 | 2,111.2 | 1,996.8 | |||||||||||||
MK Wholesale | The Americas | 338.2 | 372.9 | 905.8 | 987.6 | ||||||||||||
EMEA | 81.2 | 89.5 | 250.7 | 285.2 | |||||||||||||
Asia | 11.4 | 10.7 | 41.5 | 46.9 | |||||||||||||
MK Wholesale Revenue | 430.8 | 473.1 | 1,198.0 | 1,319.7 | |||||||||||||
MK Licensing | The Americas | 29.3 | 26.7 | 70.1 | 70.1 | ||||||||||||
EMEA | 19.0 | 16.3 | 45.1 | 42.3 | |||||||||||||
MK Licensing Revenue | 48.3 | 43.0 | 115.2 | 112.4 | |||||||||||||
Michael Kors Brand Revenue | 1,325.4 | 1,352.8 | 3,424.4 | 3,428.9 | |||||||||||||
Jimmy Choo | The Americas | 21.0 | — | 21.0 | — | ||||||||||||
EMEA | 65.0 | — | 65.0 | — | |||||||||||||
Asia | 28.7 | — | 28.7 | — | |||||||||||||
Jimmy Choo Revenue | 114.7 | — | 114.7 | — | |||||||||||||
Total Revenue | $ | 1,440.1 | $ | 1,352.8 | $ | 3,539.1 | $ | 3,428.9 | |||||||||
Income from Operations: | |||||||||||||||||
MK Retail | $ | 180.4 | $ | 178.2 | $ | 341.6 | $ | 314.4 | |||||||||
MK Wholesale | 100.5 | 140.2 | 263.6 | 367.2 | |||||||||||||
MK Licensing | 26.9 | 23.5 | 51.1 | 50.9 | |||||||||||||
Michael Kors | 307.8 | 341.9 | 656.3 | 732.5 | |||||||||||||
Jimmy Choo | 5.7 | — | 5.7 | — | |||||||||||||
Total Income from Operations | $ | 313.5 | $ | 341.9 | $ | 662.0 | $ | 732.5 | |||||||||
Operating Margin: | |||||||||||||||||
MK Retail | 21.3 | % | 21.3 | % | 16.2 | % | 15.7 | % | |||||||||
MK Wholesale | 23.3 | % | 29.6 | % | 22.0 | % | 27.8 | % | |||||||||
MK Licensing | 55.7 | % | 54.7 | % | 44.4 | % | 45.3 | % | |||||||||
Michael Kors | 23.2 | % | 25.3 | % | 19.2 | % | 21.4 | % | |||||||||
Jimmy Choo | 5.0 | % | — | % | 5.0 | % | — | % | |||||||||
Total Operating Margin | 21.8 | % | 25.3 | % | 18.7 | % | 21.4 | % | |||||||||
MICHAEL KORS HOLDINGS LIMITED
SCHEDULE 4
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
SUPPLEMENTAL RETAIL STORE INFORMATION
(Unaudited)
December 30, 2017 | |||||||||||
Retail Store Information: | Store Count | Square Footage | |||||||||
The Americas | 395 | 1,304,161 | |||||||||
Europe | 202 | 544,175 | |||||||||
Asia | 251 | 516,943 | |||||||||
Michael Kors | 848 | 2,365,279 | |||||||||
Jimmy Choo | 179 | 228,807 | |||||||||
MICHAEL KORS HOLDINGS LIMITED
SCHEDULE 5
MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES
CONSTANT CURRENCY DATA
(In millions)
(Unaudited)
Three Months Ended | % Change | |||||||||||||
December 30, 2017 | December 31, 2016 | As Reported | Constant Currency | |||||||||||
Total revenue: | ||||||||||||||
MK Retail | $ | 846.3 | $ | 836.7 | 1.1 | % | (1.0 | )% | ||||||
MK Wholesale | 430.8 | 473.1 | (8.9 | )% | (10.5 | )% | ||||||||
MK Licensing | 48.3 | 43.0 | 12.3 | % | 12.3 | % | ||||||||
Michael Kors brand | 1,325.4 | 1,352.8 | (2.0 | )% | (3.9 | )% | ||||||||
Jimmy Choo | 114.7 | — | NM | NM | ||||||||||
Total revenue | $ | 1,440.1 | $ | 1,352.8 | 6.5 | % | 4.6 | % | ||||||
Nine Months Ended | % Change | |||||||||||||
December 30, 2017 | December 31, 2016 | As Reported | Constant Currency | |||||||||||
Total revenue: | ||||||||||||||
MK Retail | $ | 2,111.2 | $ | 1,996.8 | 5.7 | % | 5.0 | % | ||||||
MK Wholesale | 1,198.0 | 1,319.7 | (9.2 | )% | (10.1 | )% | ||||||||
MK Licensing | 115.2 | 112.4 | 2.5 | % | 2.5 | % | ||||||||
Michael Kors brand | 3,424.4 | 3,428.9 | (0.1 | )% | (0.9 | )% | ||||||||
Jimmy Choo | 114.7 | — | NM | NM | ||||||||||
Total revenue | $ | 3,539.1 | $ | 3,428.9 | 3.2 | % | 2.4 | % | ||||||
MICHAEL KORS HOLDINGS LIMITED
SCHEDULE 6
NON-GAAP RECONCILIATIONS OF REPORTED TO ADJUSTED MEASURES,
EXCLUDING LONG-LIVED ASSET IMPAIRMENTS,
RESTRUCTURING AND OTHER CHARGES,
INVENTORY STEP-UP AND DERIVATIVE CONTRACT
RELATED TO ACQUISITION OF JIMMY CHOO
(In millions, except share and per share data)
(Unaudited)
Three Months Ended December 30, 2017 | ||||||||||||||||||||||||
As Reported | Impairment Charges | Restructuring and Other Charges(1) | Inventory Step-up Adjustment | Acquisition Price Derivative Contract | As Adjusted | |||||||||||||||||||
Total revenue | $ | 1,440.1 | $ | — | $ | — | $ | — | $ | — | $ | 1,440.1 | ||||||||||||
Gross profit | 884.0 | $ | — | $ | — | $ | 1.6 | $ | — | $ | 885.6 | |||||||||||||
Gross profit margin | 61.4 | % | — | % | — | % | 0.1 | % | — | % | 61.5 | % | ||||||||||||
Operating expenses | $ | 570.5 | $ | (2.6 | ) | $ | (28.0 | ) | $ | — | $ | — | $ | 539.9 | ||||||||||
Operating expense as percentage of revenue | 39.6 | % | (0.2 | )% | (1.9 | )% | — | % | — | % | 37.5 | % | ||||||||||||
Total income from operations | $ | 313.5 | $ | 2.6 | $ | 28.0 | $ | 1.6 | $ | — | $ | 345.7 | ||||||||||||
Total operating margin | 21.8 | % | 0.2 | % | 1.9 | % | 0.1 | % | — | % | 24.0 | % | ||||||||||||
MK Retail revenue | $ | 846.3 | $ | — | $ | — | $ | — | $ | — | $ | 846.3 | ||||||||||||
MK Retail operating income | $ | 180.4 | $ | 2.6 | $ | 11.0 | $ | — | $ | — | $ | 194.0 | ||||||||||||
MK Retail operating margin | 21.3 | % | 0.3 | % | 1.3 | % | — | % | — | % | 22.9 | % | ||||||||||||
MK Wholesale revenue | $ | 430.8 | $ | — | $ | — | $ | — | $ | — | $ | 430.8 | ||||||||||||
MK Wholesale operating income | $ | 100.5 | $ | — | $ | 7.3 | $ | — | $ | — | $ | 107.8 | ||||||||||||
MK Wholesale operating margin | 23.3 | % | — | % | 1.7 | % | — | % | — | 25.0 | % | |||||||||||||
Jimmy Choo revenue | $ | 114.7 | $ | — | $ | — | $ | — | $ | — | $ | 114.7 | ||||||||||||
Jimmy Choo operating income | $ | 5.7 | $ | — | $ | 8.4 | $ | 1.6 | $ | — | $ | 15.7 | ||||||||||||
Jimmy Choo operating margin | 5.0 | % | — | % | 7.3 | % | 1.4 | % | — | % | 13.7 | % | ||||||||||||
Foreign currency loss (gain) | $ | 27.0 | $ | — | $ | — | $ | — | $ | (32.0 | ) | $ | (5.0 | ) | ||||||||||
Net income attributable to MKHL | $ | 219.4 | $ | 2.1 | $ | 24.7 | $ | 1.3 | $ | 25.9 | $ | 273.4 | ||||||||||||
Weighted average diluted ordinary shares outstanding | 154,623,339 | — | — | — | — | 154,623,339 | ||||||||||||||||||
Diluted net income per ordinary share attributable to MKHL | $ | 1.42 | $ | 0.01 | $ | 0.16 | $ | 0.01 | $ | 0.17 | $ | 1.77 | ||||||||||||
______________________
(1) | Includes store closure costs recorded in connection with the Michael Kors Retail Fleet Optimization Plan, as well as transaction and transition costs recorded in connection with the acquisition of Jimmy Choo Group Limited (formerly known as Jimmy Choo PLC). |
MICHAEL KORS HOLDINGS LIMITED
Nine Months Ended December 30, 2017 | ||||||||||||||||||||||||
As Reported | Impairment Charges | Restructuring and Other Charges(1) | Inventory Step-up Adjustment | Acquisition Price Derivative Contract | As Adjusted | |||||||||||||||||||
Total revenue | $ | 3,539.1 | $ | — | $ | — | $ | — | $ | — | $ | 3,539.1 | ||||||||||||
Gross profit | $ | 2,149.5 | $ | — | $ | — | $ | 1.6 | $ | — | $ | 2,151.1 | ||||||||||||
Gross profit margin | 60.7 | % | — | % | — | % | 0.1 | % | — | % | 60.8 | % | ||||||||||||
Operating expenses | $ | 1,487.5 | $ | (18.9 | ) | $ | (51.3 | ) | $ | — | $ | — | $ | 1,417.3 | ||||||||||
Operating expense as percentage of revenue | 42.0 | % | (0.5 | )% | (1.5 | )% | — | % | — | % | 40.0 | % | ||||||||||||
Total income from operations | $ | 662.0 | $ | 18.9 | $ | 51.3 | $ | 1.6 | $ | — | $ | 733.8 | ||||||||||||
Total operating margin | 18.7 | % | 0.5 | % | 1.4 | % | 0.1 | % | — | % | 20.7 | % | ||||||||||||
MK Retail revenue | $ | 2,111.2 | $ | — | $ | — | $ | — | $ | — | $ | 2,111.2 | ||||||||||||
MK Retail operating income | $ | 341.6 | $ | 18.9 | $ | 25.4 | $ | — | $ | — | $ | 385.9 | ||||||||||||
MK Retail operating margin | 16.2 | % | 0.9 | % | 1.2 | % | — | % | — | % | 18.3 | % | ||||||||||||
MK Wholesale revenue | $ | 1,198.0 | $ | — | $ | — | $ | — | $ | — | $ | 1,198.0 | ||||||||||||
MK Wholesale operating income | $ | 263.6 | $ | — | $ | 14.9 | $ | — | $ | — | $ | 278.5 | ||||||||||||
MK Wholesale operating margin | 22.0 | % | — | % | 1.2 | % | — | % | — | % | 23.2 | % | ||||||||||||
Jimmy Choo revenue | $ | 114.7 | $ | — | $ | — | $ | — | $ | — | $ | 114.7 | ||||||||||||
Jimmy Choo operating income | $ | 5.7 | $ | — | $ | 8.4 | $ | 1.6 | $ | — | $ | 15.7 | ||||||||||||
Jimmy Choo operating margin | 5.0 | % | — | % | 7.3 | % | 1.4 | % | — | % | 13.7 | % | ||||||||||||
Foreign currency gain | $ | (14.7 | ) | $ | — | $ | — | $ | — | $ | 4.7 | $ | (10.0 | ) | ||||||||||
Net income attributable to MKHL | $ | 547.8 | $ | 15.5 | $ | 43.7 | $ | 1.3 | $ | (3.8 | ) | $ | 604.5 | |||||||||||
Weighted average diluted ordinary shares outstanding | 155,220,984 | — | — | — | — | 155,220,984 | ||||||||||||||||||
Diluted net income per ordinary share attributable to MKHL | $ | 3.53 | $ | 0.10 | $ | 0.28 | $ | 0.01 | $ | (0.03 | ) | $ | 3.89 | |||||||||||
______________________
(1) | Includes store closure costs recorded in connection with the Michael Kors Retail Fleet Optimization Plan, as well as transaction and transition costs recorded in connection with the acquisition of Jimmy Choo Group Limited. |
MICHAEL KORS HOLDINGS LIMITED
SCHEDULE 7
NON-GAAP RECONCILIATION OF REPORTED NET INCOME
TO ADJUSTED NET INCOME AND NET INCOME PER SHARE, EXCLUDING
LONG-LIVED ASSET IMPAIRMENTS AND TRANSACTION COSTS
RELATED TO ACQUISITION OF THE GREATER CHINA BUSINESS
(In millions, except share and per share data)
(Unaudited)
Three Months Ended December 31, 2016 | ||||||||||||
As Reported | Impairment Charges | As Adjusted | ||||||||||
Total revenue | $ | 1,352.8 | $ | — | $ | 1,352.8 | ||||||
Operating expenses | $ | 463.8 | $ | (0.5 | ) | $ | 463.3 | |||||
Operating expense as percentage of revenue | 34.3 | % | (0.1 | )% | 34.2 | % | ||||||
Total income from operations | $ | 341.9 | $ | 0.5 | $ | 342.4 | ||||||
Total operating margin | 25.3 | % | — | % | 25.3 | % | ||||||
MK Wholesale revenue | $ | 473.1 | $ | — | $ | 473.1 | ||||||
MK Wholesale operating income | $ | 140.2 | $ | 0.5 | $ | 140.7 | ||||||
MK Wholesale operating margin | 29.6 | % | 0.1 | % | 29.7 | % | ||||||
Net income attributable to MKHL | $ | 271.3 | $ | 0.3 | $ | 271.6 | ||||||
Weighted average diluted ordinary shares outstanding | 165,214,045 | — | 165,214,045 | |||||||||
Diluted net income per ordinary share attributable to MKHL | $ | 1.64 | $ | — | $ | 1.64 | ||||||
Nine Months Ended December 31, 2016 | ||||||||||||||||
As Reported | Impairment Charges | Transaction Costs(1) | As Adjusted | |||||||||||||
Total revenue | $ | 3,428.9 | $ | — | $ | — | $ | 3,428.9 | ||||||||
Operating expenses | $ | 1,309.2 | $ | (5.4 | ) | $ | (11.3 | ) | $ | 1,292.5 | ||||||
Operating expense as percentage of revenue | 38.2 | % | (0.2 | )% | (0.3 | )% | 37.7 | % | ||||||||
Total income from operations | $ | 732.5 | $ | 5.4 | $ | 11.3 | $ | 749.2 | ||||||||
Total operating margin | 21.4 | % | 0.1 | % | 0.3 | % | 21.8 | % | ||||||||
MK Retail revenue | $ | 1,996.8 | $ | — | $ | — | $ | 1,996.8 | ||||||||
MK Retail operating income | $ | 314.4 | $ | 4.9 | $ | 11.3 | $ | 330.6 | ||||||||
MK Retail operating margin | 15.7 | % | 0.3 | % | 0.6 | % | 16.6 | % | ||||||||
MK Wholesale revenue | 1,319.7 | — | — | 1,319.7 | ||||||||||||
MK Wholesale operating income | 367.2 | 0.5 | — | 367.7 | ||||||||||||
MK Wholesale operating margin | 27.8 | % | 0.1 | % | — | % | 27.9 | % | ||||||||
Net income attributable to MKHL | $ | 579.3 | $ | 3.5 | $ | 11.3 | $ | 594.1 | ||||||||
Weighted average diluted ordinary shares outstanding | 170,222,588 | — | — | 170,222,588 | ||||||||||||
Diluted net income per ordinary share attributable to MKHL | $ | 3.40 | $ | 0.02 | $ | 0.07 | $ | 3.49 | ||||||||
______________________
(1) | Includes transition costs recorded in connection with the acquisition of Michael Kors (HK) Limited and Subsidiaries. |