Full-price strategy bolsters Michael Kors’ third quarter

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Michael Kors update

Michael Kors’ efforts to reinvigorate sales by offering fewer promotions has paid off, with the brand posting strong quarterly revenues for the second time in a row.

For the company’s third quarter ended December 30, total revenue increased 6.5 per cent to $1.44 billion (£1.03 billion).

This includes a $114.7 million (£82.5 million) contribution from Jimmy Choo, which the company owned for two months of the quarter.

This is Michael Kors’ second straight quarter of total revenue increase, thanks to a new strategy to overcome a year of falling sales.

The strategy included a dial-back in supplies to department stores and off-price channels, refreshed product lines, the closure of underperforming stores, and fewer promotional discounts.

Retail revenue also increased 1.1 per cent to $846.3 million (£609.2 million) thanks to 32 net new store openings, but like-for-like retail sales decreased 3.2 per cent – although this was still less than analysts’ average estimate of a 6.8 per cent drop.

Gross profit for the third quarter increased 9.7 per cent to $884 million (£636.8 million), while adjusted gross profit increased 9.9 per cent to $885.6 million (£638 million).

Michael Kors now expects like-for-like retail sales to decline in the low-single digits during its fourth quarter as it clears inventory, with the plan to introduce fresher, costlier products for the next quarter.

It also raised its full-year revenue forecast to $4.66 billion (£3.35 billion) from $4.59 billion.

“We delivered better than expected results and saw the successful integration of Jimmy Choo into our luxury group,” .

“The Michael Kors brand continued to make progress on Runway 2020 initiatives across product innovation, brand engagement and customer experience.”

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