Michael Kors misses revenue estimates as European sales take hit

Michael Kors (KORS.N) missed Wall Street’s quarterly revenue estimates for the first time in almost two years, as the luxury hand-bag maker recorded lower sales at retail outlets in Europe, where it is trying to gain a stronger foothold.

Shares of the company fell 11.3 percent to $50.97 in premarket trading on Wednesday following the news.

Revenue from Kors’ European retail stores fell nearly 10 percent during the quarter ended September, leading to total retail revenue of $643.9 million.

The result missed analysts’ average estimate of $661.1 million, according to IBES data from Refinitiv.

Kors has been reducing inventory at its European stores to create exclusivity for its products in a region where wealthy fashion consumers have long preferred local luxury brands from LVMH (LVMH.PA) and Gucci parent Kering (PRTP.PA).

In order to better compete with peers in Europe, Kors is spending over $2 billion to buy Italian luxury designer Versace.

Kors said quarterly net income attributable to the company fell to $137.6 million from $202.9 million a year earlier.

Total revenue rose 9.3 percent to $1.25 billion, falling short of analysts’ expectations of $1.26 billion. The miss was the first since the quarter ended December 2016.

Excluding one-time items, the company earned $1.27 per share, above analysts’ estimates of $1.10 per share.

 

/reuters.com

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