Michael Kors Expansion Fuels Sales While Margins Tighten

Michael Kors Holdings Ltd. (KORS)’s global expansion is fueling sales for the luxury-goods company, even as the push threatens to squeeze profit margins.

The company today reported a 54 percent jump in revenue for the current ended March 29, helped by store openings and strong demand for its self-described “jet-set” affordable luxury goods. Gross margin -- earnings left after subtracting the cost of goods -- will be “slightly lower” in the current fiscal quarter and year, and operating costs will rise a bit, executives said on a conference call.

Customers snapped up Michael Kors accessories and watches at its own retail locations as well as in department stores in the U.S. and Europe, driving total revenue up to $917.5 million last quarter. The company ended the period with 405 retail stores, compared with 304 a year earlier.

The shares rose 1.3 percent to $97.01 at the close in New York. The stock has jumped 19 percent this year.

Earnings totaled 78 cents a share last quarter, the Hong Kong-based company said in a statement. Analysts had estimated profit of 68 cents on sales of $818.1 million, according to data compiled by Bloomberg.

Revenue rose 43 percent in North America and more than doubled in Europe, Michael Kors said. Sales at stores open at least a year increased 26 percent, exceeding analysts’ estimates for a 21 percent gain.

Photographer: Mark Elias/Bloomberg

Shoppers browse Michael Kors handbags in Boca Raton, Florida. Close

Shoppers browse Michael Kors handbags in Boca Raton, Florida.

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Photographer: Mark Elias/Bloomberg

Shoppers browse Michael Kors handbags in Boca Raton, Florida.

Profit for fiscal 2015 will be as much as $3.91 a share. Analysts projected $3.85 on average.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net

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