Sometime back, the retail boutique operator Francesca’s Holdings (FRAN, Financial) posted impressive quarterly earnings growth and topped Mr. Market’s expectations. The specialty retailer went public three years ago and has been able to sustain its impressive momentum. Another luxury retailer which made its debut in recent memory has continued to be an extraordinary performer. We are talking about Michael Kors (KORS, Financial), which specializes in women's apparel and accessories and have posted solid quarterly results recently. Let’s take a look.
Impressive performance
The high-end retailer surprised investors with a multiplying effect on the bottom line, which jumped impressively last quarter. Its performance was better than analysts’ estimates. Customers have been adopting Kors' expensive and trendy watches and sunglasses giving such bright results for the company. Customers have sacrificed on the quantity which they used to buy at cheaper stores in order to buy better quality products at Michael Kors. The luxury retailer also benefited from its 71 new stores openings pushing its revenue north.
Michael Kors experienced robust growth in its comparable store sales, which was way above any of the industry peers. Even after witnessing weakness in the European market, the comparable store sales from the region rose 13.6% and revenue from the region more than doubled for the period which is commendable. Where other high-end retailers are finding it difficult to handle the soft European market Kors has multiplied its revenue to $36.6 million.
Apart from retail sales the wholesale business reported revenue growth of 46% and revenue from licensing royalties jumped 27% led by high sales of its licensed products.
Plans ahead
The luxury retailer has plans to expand globally growing its operations especially in Japan in this year. Japanese market is a strong market for high end brands and Kors is expected to gain incredibly with its expansion in the region in the summer season. In fact, the company has given a sparkling outlook for the year which is well above analysts’ expectations. Despite the weak European market, Michael Kors had confidence in its potential to provide a guidance strong revenue growth, along with impressive earnings growth.
Conclusion
With a skyrocketing quarter in place and plans to expand in a much-awaited and hungry market like Japan, the company has great expectations in the coming months. To now the retailer has been posting awesome results topping expectations each time and with such a track record, the apparel retailer has definitely become a favorite to the investors. I think one should surely take note of this one.
