By Phil Wahba
Aug 6 (Reuters) - Michael Kors Holdings Ltd’s quarterly profit nearly doubled as the fashion company’s sales were helped by the roll-out of shops within department stores, gains in Europe and soaring business at its own stores.
The company updated investors on Tuesday about how it plans to keep its momentum going, including new stores in India and Brazil, and a bigger push for its watch and jewelry business worldwide.
Kors stock rose 2.3 percent to $69.43 in morning trading after hitting an intraday high of $71.36 - more than triple its price of $20 in its December 2011 initial public offering.
Fashion designer Michael Kors’ namesake company has won market share from Coach Inc with its trendy but affordable, so-called jet-set lifestyle offerings and the designer’s high visibility as a judge on the first 10 seasons of the television fashion show “Project Runway.”
In Kors’ fiscal first quarter, ended June 29, revenue rose 54 percent to $640.9 million, well above the average Wall Street estimate of $570.5 million, according to Thomson Reuters I/B/E/S. Comparable-store sales - sales at stores open at least 12 months - rose 27.3 percent.
In North America, which generates 86 percent of the company’s business, comparable-store sales were up 25 percent, compared with a 1.7 percent drop for Coach, a much more established brand.
The company operates 249 of its own stores in North America and on Friday, Michael Kors Chief Executive John Idol said that could grow to 400.
Kors’ sales growth was even more pronounced in its wholesale business, which serves chains such as Macy’s Inc and Nordstrom Inc, helped by the rollout of more elaborate shops-in-shops that enhance the presentation of its products. Worldwide wholesale net sales surged 59.3 percent.
Idol said the shops “highlight” the Michael Kors brand’s appeal and will help the company “continue to achieve strong growth” in the wholesale business as the rollout continues.
In Europe, still a relatively new market for the company, sales more than doubled. Kors has 49 stores there and thinks it can eventually have 200 locations. It also said it opened its first stores in Brazil and, with a partner, in India.
Kors, whose ads promote a jet-set lifestyle featuring women in exotic locales with handbags bearing its trademark MK logo, expects comparable sales to be up 15 percent to 20 percent in the current quarter.
Kors now has 60 shops for watches and jewelry and plans on having 500 eventually.
Despite the stronger-than-expected sales, Kors’ full-year sales forecast of $2.8 billion to $2.9 billion was in line with Wall Street’s projections for $2.84 billion.
First-quarter net income rose to $125 million, or 61 cents per share, from $68.6 million, or 34 cents per share, a year earlier. That was 12 cents better than expected.