Michael Kors Posts Q4 Loss; Stock Down

(RTTNews) - Michael Kors Holdings Limited (KORS) reported that its net loss attributable to the company for the fiscal 2017 fourth quarter was $26.8 million or $0.17 per share, compared to net income of $177.0 million, or $0.98 per share in the fourth quarter of fiscal 2016.

In the Wednesday's Pre-Market trade, KORS is currently trading at $33.70, down $2.57 or 7.09 percent.

Excluding the impairment charges, net income for the quarter was $118.0 million or $0.73 per share, compared to net income of $184.8 million or $1.02 per share last year.

In the fourth quarter of fiscal 2017 the Company recorded impairment charges of $193.8 million primarily related to under-performing lifestyle stores. In addition, the Company announced today that it intends to improve the profitability of its store fleet by closing between 100 and 125 of its full-price retail stores over the next 2 years. Over this time period, the Company expects to incur approximately $100 - $125 million of one-time costs associated with store closures. Collectively, the Company ultimately anticipates ongoing annual savings of $60 million as a result of store closures and the lower depreciation and amortization associated with these impairment charges.

Total revenue decreased 11.2% to $1.06 billion from $1.20 billion in the fourth quarter of fiscal 2016. On a constant currency basis, total revenue decreased 10.6%. Fiscal year 2017 had 52 weeks versus 53 weeks in fiscal year 2016. As a result, the Company's results for the fiscal 2016 fourth quarter and fiscal year ended April 2, 2016, include approximately $34 million in retail sales related to the 53rd week. Comparable sales calculations exclude the 53rd week.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.7 per share and revenues of $1.05 billion for the fourth-quarter. Analysts' estimates typically exclude special items.

Retail net sales increased 0.5% to $575.3 million, driven primarily by 159 net new store openings since the end of the fourth quarter of fiscal 2016, including 111 stores associated with the Company's acquisition of the previously licensed operation in Greater China. Comparable sales decreased 14.1%. On a constant currency basis, retail net sales grew 1.1%, and comparable sales decreased 13.6%. Wholesale net sales decreased 22.8% to $456.1 million and on a constant currency basis, wholesale net sales decreased 22.3%. Licensing revenue decreased 6.2% to $33.4 million.

On May 25, 2017, the Company's Board of Directors authorized a new $1 billion share repurchase program. Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under the Company's insider trading policy, and other relevant factors.

For the first quarter of fiscal 2018, the Company expects total revenue to be between $910 million and $930 million, and a comparable sales decrease in the high-single digit range. Operating margin is expected to be approximately 13.0%. Earnings per share are expected to be in the range of $0.60 - $0.64. Analysts expect the company to report earnings of $0.81 per share and revenues of $941.28 million for the first quarter.

For fiscal 2018, the Company expects total revenue to be approximately $4.25 billion and for comparable sales to decrease in the high-single digit range. Operating margin is expected to be approximately 16.0%. For the full-year fiscal 2018, earnings per share are expected to be in the range of $3.57 - $3.67. Wall Street currently is looking for fiscal year 2018 earnings of $3.94 per share on annual revenues of $4.37 billion.