The famous fashion retailer, Michael Kors’ shares fell by more than 23% on Wednesday after the fourth quarter earnings was released. Michael Kors is well known for its exclusive handbags, shoes and watches.
Their total revenue increased with 17.8% from $917.5 million in the fourth quarter of the 2014 financial year to $1.1 billion in the 2015 fiscal fourth quarter.
Before the market open, the fashion retailer reported diluted earnings per share of $0.90, just below analysts’ estimate for $0.91 and more than the $0.78 reported in the fourth quarter of 2014.
The retail net sales also increased with 14.9% and can be attributed to the opening of 121 net new stores since the fourth quarter of the 2014 financial year. Wholesale net sales also increased with 20.4% to $570.4 million and licensing revenue increased to $41.3 million.
Micahel Kors CEO, John Idol wrote: “While we were faced with a number of headwinds in the fourth quarter, we were pleased with the strong performance across our segments and geographies” as reported by Business Insider.
“We believe that our results demonstrate the strength of the Michael Kors brand,” he added, “as our luxury products continue to resonate with consumers worldwide.”
Although gross profit increased with 14.8% to $630.8 million, the gross profit margin, as reported in the fourth quarter earnings, was reduced by approximately 30 basis points due to the change in foreign currency exchange rates. The gross profit as a percentage of total revenue was down to 58.4% in the 2015 report compared to 59.9% in the fourth quarter of the 2014 financial year.
On 28 March 2015, the date of the fourth quarter earnings report, Michael Kors operated 526 retail stores compared to only 405 retail stores at the end of the 2014 fourth quarter report. Read the full report here.