Michael Kors' (KORS) fiscal first-quarter earnings topped estimates, helped by Jimmy Choo and store renovations, and the fashion house raised its 2018 outlook above consensus views.
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Estimates: Wall Street was expecting EPS to soar 17.5% to 94 cents, according to Zacks Investment Research. Revenue was seen climbing 19% to $1.14 billion. Consensus Metrix forecast same-store sales to rise 0.9% overall.
Results: EPS of $1.32 on revenue of $1.20 billion, while same-store sales were flat. Retail revenue rose 3.2% to $639.5 million, and wholesale revenue grew 19.5% to $362.8 million. Recently acquired Jimmy Choo contributed $172.7 million to revenue.
Management also noted same-store sales growth in accessories, footwear and women's ready to wear. And stores renovated to the new luxury concept outperformed the rest of the chain.
Outlook: The company lifted its full-year EPS guidance by 25 cents to $4.90-$5.00, above consensus for $4.77, on revenue of $5.125 billion, above consensus for $5.1 billion and up from a prior view of $5.1 billion. For fiscal Q2, Kors sees EPS of $1.03-$1.08, below views for $1.24, on revenue of $1.26 billion, below consensus for $1.29 billion, with same-store sales to decline in the low-single-digits.
Stock: Shares jumped 6.7% to close at 70.01 on the stock market today, retaking their 50-day average and closing in on a 70.10 buy point. Earlier in the day, Michael Kors surged as high as 70.99, indicating a breakout, before paring gains.
Among peers, Ralph Lauren (RL) rose 0.7%, Canada Goose (GOOS), which reports early Thursday, rose 1.2%, and Apparel-Clothing Manufacturing Industry Group leader VF Corp. (VFC) added 0.8%.
Caution On Michael Kors Stock
CFRA Research senior analyst Angelo Zino raised his price target on Michael Kors stock to 70 from 65 and maintained a hold rating. However, he sees some challenges ahead.
"Heightened inventory levels will likely continue to be a headwind and we view potential for further upside as limited, as we see KORS' strategic acquisition strategy having a difficult time reviving organic growth," Zino said in a research note. "Valuation does look more positive with signs of momentum in footwear, ready-to-wear and accessories, but we are cautious."
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The post Michael Kors Is Just Below A Buy Point After Near Breakout On Strong Earnings appeared first on Investor's Business Daily.
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