NEW YORK (TheStreet) - Michael Kors (KORS - Get Report) spooked investors on Monday after the handbags and accessories retailer reported better-than-expected quarterly earnings, but renewed fears about profitability. Specifically, concerns abounded about how the fashion retailer's inventory levels and markdowns are hitting the bottom line as well as its expenses related to growth investment.
"Our focus goes well beyond one year in order to support growth," Michael Kors Chairman and CEO John Idol said on the conference call. "Obviously we are making strategic investments" by expanding the store base, relocating stores and spending money on marketing, distribution and technology.
Michael Kors reported net income of $187.7 million, or 91 cents a share, for its fiscal first quarter, compared to $125 million, or 61 cents a share, in the year-earlier quarter. Analysts, according to Thomson Reuters, expected quarterly earnings of 81 cents a share.
Here are three big takeaways from the conference call: 1. Is Michael Kors opening too many stores? Not according to management. Responding to criticism that the company has opened too many stores too fast, Idol said, "We absolutely disagree." Including licensed locations, there were 605 Michael Kors stores worldwide at the end of the first quarter of fiscal 2015, up from 555 at the end of the first quarter of fiscal 2014. Read More: 5 Retailers Fighting Back Against Amazon for Back-to-School Sales
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