Michael Kors' same-store sales fall less than expected

MarketsReuters

Feb 7 (Reuters) - Michael Kors Holdings Ltd's reported a much smaller-than-expected drop in same-store sales for the holiday quarter during which the luxury goods maker sharply cut promotions to reinvigorate sales and brand prestige.

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Shares of the company, which also raised its full-year sales forecast, were up nearly 8 percent in trading before the U.S. market opened on Wednesday.

Kors said same-store sales fell 3.2 percent in its third quarter ended Dec. 30, well below analysts average estimate of a decline of 6.8 percent, according to Thomson Reuters I/B/E/S.

Once the hottest name in affordable luxury, Kors made its products available more widely and relied on promotions to boost sales as people increasingly shopped online for sale.

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But that led to a year-long decline in revenue, which ended last quarter as Kors limited supplies to department stores and off-price channels, refreshed its product lines and shut underperforming stores.

Kors had said it would cut promotions for the holiday season by 67 days at department stores and off-price channels and by nearly two-thirds at its stores and website.

That helped Kors's total revenue rise for the second quarter in a row – 6.5 percent to $1.44 billion – also helped by two months of sales for Jimmy Choo, the high-end shoemaker it bought last year.

Jimmy Choo contributed $114.7 million in revenue.

The boost from Jimmy Choo helped the company raise its full-year revenue forecast to $4.66 billion from $4.59 billion.

Net income attributable to Kors fell to $219.4 million, or $1.42 per share, from $271.3 million, or $1.64 per share, due to higher costs and a rise in the tax rate.

Excluding one-time items, the company earned $1.77 per share, beating analysts' estimates of $1.29. (Reporting by Nivedita Balu and Sangameswaran S in Bengaluru; Editing by Savio D'Souza)

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