Michael Kors Provides Cautious Forecast After First-Quarter Beat

Michael Kors Holdings Ltd. provided a cautious forecast for earnings and sales this year, showing that luxury-goods makers are navigating a turbulent retail environment.

Profit will be $4.56 to $4.64 a share, excluding some items, in the year through March 2017, and total revenue will be flat, the London-based company said in a statement Wednesday. That matches the company’s earlier forecast, even after it posted first-quarter earnings and sales that beat analysts’ projections.

Chief Executive Officer John Idol cited dwindling mall traffic and decreasing tourism as challenges the company is facing, echoing sentiments expressed on Tuesday by his counterpart at rival Coach Inc. Kors, which makes luxury handbags, clothing and accessories, is trying to combat those trends by cutting inventory at ailing department stores to focus on selling full-price products.

“We question Kors’s ability to pull back on promotions without avoiding a precipitous fall in demand as the consumer has come to expect discounts,” Camilo Lyon, an analyst at Canaccord Genuity Inc., wrote in a report before the results were released.

First-quarter profit was 88 cents a share, excluding some items. Analysts estimated 74 cents, on average. Revenue rose 0.2 percent to $987.9 million, beating analysts’ $953.3 million average projection.

Shares of Michael Kors fell 2.7 percent to $48.76 at 7:06 a.m. in New York. The stock had risen 25 percent this year through Tuesday.

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