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.”