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TheStreet Open House

Michael Kors Holdings Limited Announces Second Quarter Fiscal 2014 Results

Stocks in this article: KORS

Conference Call Information

A conference call to discuss second quarter results is scheduled for today, November 5, 2013 at 8:00 a.m. EDT. A replay of the call will be available today at 11:00 a.m. EDT; to access the replay, dial 1-877-870-5176 for domestic callers or dial 1-858-384-5517 for international callers and enter access code 1011766. The conference call will also be webcast live in the investor relations section of www.michaelkors.com. The webcast will be accessible on the website for approximately 90 days after the call.

About Michael Kors

Michael Kors is a world-renowned, award-winning designer of luxury accessories and ready to wear. His namesake company, established in 1981, currently produces a range of products through his Michael Kors and MICHAEL Michael Kors labels, including accessories, footwear, watches, jewelry, men’s and women’s ready to wear, and a full line of fragrance products. Michael Kors stores are operated, either directly or through licensing partners, in some of the most prestigious cities in the world, including New York, Beverly Hills, Chicago, London, Milan, Paris, Munich, Istanbul, Dubai, Seoul, Tokyo and Hong Kong.

Forward Looking Statements

This press release contains forward-looking statements. You should not place undue reliance on such statements because they are subject to numerous uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Forward-looking statements include information concerning the Company’s possible or assumed future results of operations, including descriptions of its business strategy. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “seek,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. The forward-looking statements contained in this press release are based on assumptions that the Company has made in light of management’s experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors that it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual financial results or results of operations and could cause actual results to differ materially from those in these forward-looking statements. These factors are more fully discussed in the "Risk Factors" section and elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2013 (File No. 001-35368), filed on May 29, 2013 with the U.S. Securities and Exchange Commission.

       

SCHEDULE 1

 

MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share data)

(Unaudited)

 
Three Months Ended Six Months Ended
September 28,     September 29, September 28,     September 29,
  2013     2012     2013     2012  
Net sales $ 707,444 $ 513,065 $ 1,323,692 $ 910,435
Licensing revenue   32,859     19,870     57,470     37,365  

Total revenue

740,303 532,935 1,381,162 947,800
Cost of goods sold   290,428     217,035     534,016     380,900  
Gross profit 449,875 315,900 847,146 566,900
Total operating expenses   228,415     157,972     428,124     297,029  
Income from operations 221,460 157,928 419,022 269,871
Interest expense, net 130 555 300 990
Foreign currency loss (gain)   18     (275 )   276     (650 )
Income before provision for income taxes 221,312 157,648 418,446 269,531
Provision for income taxes   75,504     59,820     147,642     103,058  
Net income $ 145,808   $ 97,828   $ 270,804   $ 166,473  
 
Weighted average ordinary shares outstanding:
Basic 202,560,870 194,323,935 202,686,313 193,557,194
Diluted 205,154,692 200,192,291 205,547,191 199,791,708
 
Net income per ordinary share:
Basic $ 0.72 $ 0.50 $ 1.34 $ 0.86
Diluted $ 0.71 $ 0.49 $ 1.32 $ 0.83
 
Statements of Comprehensive Income:
Net income $ 145,808 $ 97,828 $ 270,804 $ 166,473
Foreign currency translation adjustments 6,331 4,744 4,973 1,466
Net realized and unrealized losses on derivatives   (2,592 )   -     (3,213 )   -  
Comprehensive Income $ 149,547   $ 102,572   $ 272,564   $ 167,939  
 
           

SCHEDULE 2

 

MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 
September 28, March 30, September 29,
Assets   2013     2013   2012
Current assets
Cash and cash equivalents $ 618,841 $ 472,511 $ 312,244
Receivables, net 228,850 206,454 185,700
Inventories 404,194 266,894 278,368
Deferred tax assets 9,381 8,480 11,833
Prepaid expenses and other current assets   84,675     34,850     99,163
Total current assets 1,345,941 989,189 887,308
Property and equipment, net 284,580 242,113 194,114
Intangible assets, net 36,316 20,980 13,533
Goodwill 14,005 14,005 14,005
Deferred tax assets 7,777 4,389 3,158
Other assets   19,155     18,889     7,366
Total assets $ 1,707,774   $ 1,289,565   $ 1,119,484
 
Liabilities and Shareholders' Equity
Current liabilities
Revolving line of credit $ - $ - $ 11,616
Accounts payable 119,420 82,977 87,410
Accrued payroll and payroll related expenses 36,746 38,642 141,981
Accrued income taxes 7,588 9,074 3,801
Accrued expenses and other current liabilities   54,444     33,555     32,281
Total current liabilities 218,198 164,248 277,089
Deferred rent 69,976 56,986 49,583
Deferred tax liabilities 19,010 13,163 8,872
Other long-term liabilities   14,293     7,922     5,962
Total liabilities 321,477 242,319 341,506
Commitments and contingencies
Shareholders' equity

Ordinary shares, no par value; 650,000,000 shares authorized, and 203,846,931 shares issued and outstanding at September 28, 2013, 201,454,408 shares issued and outstanding at March 30, 2013 and 199,746,220 shares issued and outstanding at September 29, 2012

- - -
Additional paid-in capital 490,941 424,454 382,123
Accumulated other comprehensive loss (1,701 ) (3,461 ) 731
Retained earnings   897,057     626,253     395,124
Total shareholders' equity   1,386,297     1,047,246     777,978
Total liabilities and shareholders' equity $ 1,707,774   $ 1,289,565   $ 1,119,484
 
         

SCHEDULE 3

 

MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED SEGMENT DATA

(In thousands)

(Unaudited)

 
Three Months Ended Six Months Ended
September 28,     September 29, September 28,     September 29,
2013 2012 2013 2012
Revenue by Region:
North America (U.S. and Canada) $ 618,277 $ 471,424 $ 1,169,831 $ 848,573
Europe 114,049 56,651 195,528 90,038
Other Regions   7,977   4,860   15,803   9,189
Total Revenue: $ 740,303 $ 532,935 $ 1,381,162 $ 947,800
 
Revenue by Segment:
Net sales: Retail $ 355,573 $ 242,280 $ 681,245 $ 457,284
Wholesale 351,871 270,785 642,447 453,151
Licensing   32,859   19,870   57,470   37,365
Total Revenue: $ 740,303 $ 532,935 $ 1,381,162 $ 947,800
 
Income from Operations:
Retail $ 103,133 $ 68,436 $ 206,247 $ 128,315
Wholesale 98,531 77,399 179,577 118,117
Licensing   19,796   12,093   33,198   23,439
Total Income from Operations $ 221,460 $ 157,928 $ 419,022 $ 269,871




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