Michael Kors sales continue to fall in third quarter

Michael Kors once again reported a decrease in revenue for its most recently completed third quarter. Over the nine-month period, which ended December 31, 2016, total revenue reached $3.43 billion, down 2.4 percent or 2.3 percent on a constant currency basis. Net income was also down by 12 percent at $579 million, according to the company’s quarterly earning statement.

During the third quarter, total revenue decreased 3.2 percent to $1.35 billion, while net income fell 8 percent to $271.3 million.

Earnings were “in line with our expectations” and the company is pleased with the “great consumer response to our new digital flagships in Europe”, according to John D. Idol, the company’s Chairman and CEO.

Still, for fiscal 2017, the company had to lower its 2017 outlook. The company now expects total revenue to be approximately $4.48 billion, compared to $4,55 billion, as previously forecast.

The company’s CEO added that they are disappointed with the North American and European comparable store sales performance during the quarter, but did not offer any specific numbers.

“We believe that headwinds in these markets will continue throughout the Spring season as we face reduced traffic trends in shopping malls, currency fluctuation, uncertainty surrounding certain political changes in European countries and the implementation of our reduced promotional cadence in North America,” Idol said in a news statement.

Retail net sales increased 9.2 percent to $836.7 million in the third quarter, driven primarily by sales in Asia where revenue was four times higher. Meanwhile, revenue in the Americas and Europe was slightly down.

In fact, retail net sales were driven primarily by 193 net new store openings over the last year, including 143 stores associated with the Company's recent acquisitions of previously licensed operations in Greater China and South Korea. Still, sales were down 6.9 percent on a comparable basis.

Ultimately, weak sales and licensing revenue led to a fall in total revenue. Last quarter, wholesale net sales were down 17.8 percent or 17.5 percent on a constant currency basis to $473,1 million, while licensing revenue was also down 23 percent, bringing in $43 million.

While the company faces a tough and saturated American market, it remains Michael Kors’s biggest outlet, racking in a total revenue of $983.8 million in the third quarter. Still, Asia remains the company’s most dynamic market as the company continues to expand. As for Europe, the market also remains an important area for the company with total revenue of $256.7 million.

The publicly traded company currently operates 816 retail stores, including concessions, as compared to 623 retail stores it reported operating during the same prior-year period. As of December 31, 2016, there were 944 Michael Kors stores worldwide, Including licensed locations.

Michael Kors sales continue to fall in third quarter

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