High-end clothing and handbag designer Michael Kors (KORS) provided further evidence Wednesday that global consumers appear to be rather happily spending on extravagant goods.
One day after jewelry seller Tiffany (TIF) topped analysts' expectations for its most recent quarter, Michael Kors showed impressive numbers to end its first full year as a publicly traded company.
The Hong Kong-based apparel and accessories merchant said fourth-quarter revenue increased 57.1% to $597.2 million from $380 million in the prior-year period, with same-store sales climbing 36.7%. The company earned $101.1 million, or 50 cents a share, compared with $43.6 million, or 22 cents a share, a year earlier. Those results easily beat analysts' consensus estimates. North America is by far the company's largest market, but in Europe, revenue doubled for both the fourth quarter and full fiscal year, to $73.1 million and $220.7 million, respectively.
CEO John Idol said in a prepared statement that Michael Kors' "jet-set luxury accessories" and "ready to wear" items are speaking to consumers worldwide. The forecast from the company doesn't suggest otherwise, though it does leave room to come up a bit shy of Wall Street's expectations in some areas in the months ahead. However, that's as much of a function of its performance as a company and a stock since it came public in December 2011 as anything. For five straight quarters, Michael Kors has beaten sales and earnings projections, and the shares have been a star, advancing 156% in those 17 months. The S&P 500 is up 37% in that time, and retail, using the SPDR S&P Retail (XRT) ETF as the measure, has gained 30%.
In recent trading, the stock was adding 1.8% at $63.10.
Going back to late February, the consensus sales forecast for the fiscal year has been right around $2.8 billion, making the company's current outlook of as much as $2.75 billion a modest disappointment. At the low end of the forecast, $2.65 billion, revenue would be up 21.5% from $2.18 billion in the year that ended March 30. The just-completed year saw revenue surge nearly 68% from fiscal 2012. The prediction from the company and from analysts is here:
Source: Michael Kors, FactSet. Revenue in $ millions.
Same-store sales estimates have gradually increased from 16.9% to near 19%, keeping within Michael Kors' own targeted range. The average EPS projection has come up from $2.36 to $2.43 now, so profits, if they come through as estimated, aren't a cause for concern for the time being. Taken together, investors were fine with it all, giving the stock a minor bump higher.
As for luxury goods broadly, several names in the group have been offering commentary of late bolstering the case that the market for pricey goods is generally doing fine. Still, a few areas of sluggishness are out there. Tiffany easily beat estimates on Tuesday, with a boost from its international operations, while Saks (SKS) had stronger-than-expected sales for its first quarter. Bag seller Coach (COH) did the same when it reported its results last month, and British clothing and accessories line Burberry topped profit expectations, helped along by its China business.
With that said, trouble spots aren't entirely absent from the higher end. Macy's (M) said it was noting "weakness" among shoppers at its upper-end Bloomingdale's in the early months of the year, and department-store operator Nordstrom (JWN) fell short of sales estimates when it last posted earnings.
On the whole, though, retail has been showing life. The nation's economy isn't necessarily soaring, but this critical part of it appears to be on the mend. Sales data from the Census Bureau show that clothing and accessories as a category overall, not only expensive items, have been rising steadily for the past year. Meanwhile, consumer confidence this week hit its best reading since early 2008.
You tell us: Is the consumer back, or are only the wealthier ones?