For the past quarter, Michael Kors (NYSE: KORS) beat on both profits and revenue. 98 cents per share versus 97 cents from estimation and $1.2 billion in revenue versus $1.15 billion from estimation. Shares in the company—beaten down 25% over the past three months since Tuesday’s close—jumped 5% in early trading to $44.84. Moreover, its business plan to expand in Asian market is the key that drive the price back to $50 level. Along with this earning result, all bag makers are bullish today.
On Wednesday, the company acquired Michael Kors Ltd., the exclusive licensee of products in China and other jurisdictions in Asia, for $500 million in cash.
“We believe that our brand is gaining strong momentum in greater China, making it the ideal time for us to integrate this territory into our business and capitalize on the enormous growth potential in this region,” Chief Executive John Idol said.
Kors anticipate their expenses to rise on continued global investments in digital flagships, corporate talent, new stores, shop-in-shops, infrastructure and distribution, as well as a $15 million charge related to the acquisition of the Greater China licensee.
For the full year, the company guided next quarter earnings of $4.56 to $4.64 a share and for revenue to be flat. Analysts had forecast $4.50 a share on a 3% sales increase.
“Looking ahead, we see multiple growth opportunities, including the expansion of our international markets, the growth of our digital e-commerce flagships, the build-out of our men’s business, the launch of Michael Kors Access wearable technology line, and the continued design innovation of our luxury fashion product,” he said. However, concerns of the retailers and also strong dollar impact will force the company to take serious plans to face them. The bullish plan KORS set in China is still unclear with the outcome. The slowdown of economy from China posts the biggest threat to their business. How can u force people to buy this relatively expensive bags when Chinese people figure out they have more ways to enjoy their lives.
Michael Kors terrific performance eased the concern for handbag makers today and all its peers are now bullish today and will likely continue this up trend until they post the earnings in coming weeks. Coach reaches near $40 this morning and Kate Spade is up more than 3% today.