On Wednesday morning, the company reported earnings per diluted share of $0.29, compared to a loss per share of $0.17 for the same quarter last year. Revenue likewise rose to $1.18 billion from $1.06 billion in 2017, topping the consensus estimate of $1.15 billion.
The numbers weren’t strong enough to impress investors, however, and shares dropped more than 13 percent on Wednesday following the earnings announcement. Partly to blame was the disappointing outlook for fiscal 2019, including expected earnings per share of between $4.65 and $4.75, potentially lower than analysts’ projection of $4.74 per share. The company projects total revenue for the year to be approximately $5.10 billion, including incremental revenue of $570 to $580 million from Jimmy Choo. Comparable sales for Michael Kors are expected to be about flat.
Still, the company pointed to several positive results in the quarter, including 2.3 percent growth in comparable sales at Michael Kors, driven by interest in the brand’s accessories, footwear, ready-to-wear and men’s categories, as well as strong early enrollment in its KORSVIP loyalty program, which launched towards the end of the quarter. Jimmy Choo, which the company acquired in July 2017 for $1.2 billion, brought in revenue of $107.9 million during the quarter, and management indicated that it is making investments in the brand for accelerated long-term growth.
“Looking to fiscal 2019, we have a number of initiatives planned to drive growth in both of our luxury brands,” said John D. Idol, chairman and chief executive officer. “For Michael Kors, we expect growth to be led by our retail business, as we remain focused on executing initiatives across fashion luxury product, brand engagement and customer experience. For Jimmy Choo, we will continue to make strategic investments to expand our retail fleet globally, capitalize on the significant opportunity to grow our accessories business and increase brand engagement through glamorous red-carpet marketing communications.”
Idol also didn’t rule out bringing other brands into the fold, adding that the company, “will continue to explore acquisitions to complement our existing luxury portfolio.”