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Michael Kors Surges After Raising Annual Profit Forecast

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Michael Kors Soars After Raising Annual Profit Forecast on Sales
Full-year profit will be as much as $1.34 a share, up from a prior forecast of as much as $1.12, the company said in a statement today. Photographer: Konrad Fiedler/Bloomberg

Aug. 14 (Bloomberg) -- Michael Kors Holdings Ltd., the luxury-goods company founded by the designer of that name, soared the most in six months after raising its profit forecast because of better-than-expected sales at existing stores.

The shares added 16 percent to $49.33 in New York, for the biggest gain since Feb. 14. The stock has more than doubled since the Hong Kong-based company’s initial public offering in December.

Profit this year will be as much as $1.34 a share, up from a previous forecast of as much as $1.12, the company said in a statement today. That topped analysts’ average estimate of $1.13, according to data compiled by Bloomberg.

“The company is in the midst of the critical and lucrative transformation from fashion designer to authentic global lifestyle brand, and it is precisely during such evolutions when shareholders are most rewarded for taking risk investing in this type of ‘brandsformation’ stock,” Omar Saad, an analyst with International Strategy & Investment Group LLC, wrote in a note to clients today.

Saad, who’s based in New York, recommends buying the shares.

Sales including licensing revenue rose 71 percent to $414.9 million in the first quarter ended June 30, driven by comparable-store sales and shops within department stores, the company said.

“We saw continued strength in each of our retail, wholesale and licensing segments and across geographies,” John Idol, the company’s chairman and chief executive officer, said in the statement.

Retail Sales

Retail net sales rose 76 percent to $215 million in the quarter, driven by a 37 percent increase in sales at stores open for at least a year, or comparable-store sales. The company opened 76 stores from the same period last year and operated 253 retail stores as of June 30.

First-quarter net income more than doubled to $68.6 million, or 34 cents a share, from $24.1 million, or 13 cents a year earlier.

The company also raised its profit outlook for the second quarter of fiscal 2013 to as much as 35 cents a share, topping analysts’ average estimate of 28 cents.

To contact the reporters on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net; Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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