Michael Kors Beats Street, But Shares Down on North American Slowdown

Despite beating Wall Street expectations, Michael Kors Holdings Ltd. shares are trading lower this morning on concern over slowing North American sales.

Net income for the quarter ending Dec. 27 was $303.6 million, or $1.48 per diluted share, versus $229.6 million, or $1.11 per share, in the year-ago period. It was a handy beat over the $1.33 analysts expected.

The firm reported net revenue of $1.3 billion, a 29.9 percent increase over $964.8 million in the year-ago period. Retail sales increased during the quarter to $689.4 million, with the North American market leading the way. Comparable store sales were up double digits in Europe and Japan, and 6 percent in North America, though the strong dollar abroad did hold some of those numbers down.

Despite the strong quarter, North American sales did slow. There has been some concern over the ubiquity of the Michael Kors logo and continued promotional environment for the brand from market-watchers, especially now that North America slowed during the holidays. The company announced a modest guidance for the fourth quarter and fiscal year.

In the fourth quarter, Kors expects revenue to range $1.05 billion to $1.08 billion. Diluted earnings per share are expected to range 89 cents to 92 cents for the fourth quarter. Analysts guided 94 cents for the fourth quarter and revenue of $1.15 billion.

For fiscal year 2015 the company anticipates revenue of $4.4 billion, and diluted earnings per share to range $4.27 to $4.30.

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