Investors pushed shares of Michael Kors lower Thursday, despite the luxury retail chain delivering better-than-expected earnings for its fiscal 2015 third-quarter. Shares took a big hit right after results were announced in the early morning and closed the trading day down about 2% from the previous close.
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For the period ended Dec. 27, 2014, Kors posted a profit of $1.48 per share, up an impressive 33% from earnings per share of $1.11 during the same quarter last year. This was markedly above analysts' estimates for earnings of $1.33 per share. Third-quarter revenue was also strong at $1.3 billion, or an increase of nearly 30% from the year-ago period. This was in line with Wall Street's expectations.
Unfortunately, it wasn't enough to stop the stock from selling off. Shares of Michael Kors were down about 2.2% to $69.78 as the market closed..Over the past 52 weeks, KORS stock has moved between $65.10 and $101.04, according to S&P Capital IQ data. Weak guidance for the current quarter as well as slowing same-store sales helped push the stock down today. North American comps, for example, rose just 6% in the quarter-- marking the slowest pace since the company went public in 2011.
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E-commerce was one bright spot in the quarter, with Kors' online sales growing 73% in the period. While this was encouraging, Kors used it as an excuse for its slowing same-store sales figure. "Had we included e-commerce in our comparable store base,North Americacomparable store sales results would have been 380 basis points higher, which we believe is a more accurate reflection of our performance," explained CEO John D. Idol.
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Looking ahead, Michael Kors expects fourth-quarter revenue in the range of $1.05 billion to $1.08 billion, with comparable sales in the mid-single digits. Additionally, Kors expects a fourth-quarter profit of between $0.89 and $0.92 per share. This guidance is significantly lower than analysts' estimates for Q4 earnings per share of $0.94.
Despite these mixed results and lowered guidance for the current quarter, consumers are still buying Michael Kors products at an impressive clip. In fact, this was the 13th consecutive quarter in which revenue, same-store sales, and earnings all grew. Therefore, it seems high expectations were the culprit in the retail stock's sell-off today, rather than stalling growth. With shares of Michael Kors now trading near the stock's 52-week low, I believe this creates an opportunity for long-term investors.
The article Michael Kors Holdings Ltd. Earnings: Why the Stock Was Down Today originally appeared on Fool.com.
Tamara Rutter has no position in any stocks mentioned. The Motley Fool recommends Michael Kors Holdings. The Motley Fool owns shares of Michael Kors Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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