3 Big Takeaways From Michael Kors' Earnings

NEW YORK (TheStreet) - Michael Kors (KORS) 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.

Revenue rose 43.4% to $919.2 million compared to last year's quarter. Retail net sales rose 47.5% to $480.2 million. Gross profit, as a percentage of revenue, rose 20 basis points to 62.2%. The company reported same-stores sales growth of 18.7% for its North American stores against consensus estimates of 17.6%.

Shares were down 6.6% to $76.43 on Monday.

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.

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