Can Michael Kors Holdings Ltd (KORS) Continue Its Winning Streak?
Michael Kors Holdings Ltd. (KORS) Consumer Discretionary – Textiles, Apparel & Luxury Goods | Reports August 9, Before Market Opens
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Michael Kors Holdings Ltd (KORS) 2Q Earnings – Key Takeaways
- The Estimize consensus is looking for earnings per share of 76 cents on $958.23 million in revenue, 2 cents higher than Wall Street on the bottom line and $5 million on the top
- Currency headwinds, frequent discounting and higher operating costs could takes their toll on this quarter’s report
- After dismal earnings from peers, the bar has been set lower for Michael Kors
- What are you expecting for KORS? Get your estimate in here!
After weak reports from Kate Spade and Coach, luxury brands appear to be unraveling. This doesn’t bode well for Michael Kors who reports its second quarter results tomorrow, before the market opens. Shares of the luxury brand have risen 25% this year on consecutive beats and strong comparables. Unfortunately, the retail sector has been choppy lately and with a large exposure to volatile international markets both earnings and revenue could see their first downturn in over a year. Estimates are seeing downward revisions activity ahead of its report, typically a sign of a miss on the horizon.
The Estimize community is looking for earnings per share of 76 cents, down 12% from the same period last year. That estimate has dropped 11% since KORS most recent report in June. Revenue is anticipated 3% lower at 958.23 million, marking the first quarter of negative comparisons in over 2 years. Don’t expect the market to take a miss lightly either. Kate Spade’s dismal report pushed its stock nearly 20% lower the next day.
The main focus of tomorrow’s earnings report will likely be comps. In the past, strong comps were driven by new store openings, expanding existing outlets and building out its omnichannel capabilities. But the retail environment is more challenging these days. Luxury brands and longtime status symbols are simply not resonating with consumers like they have in the past. As a result we have seen a great deal of discounting from key brands including Michael Kors. Discounting may very well drive sales but it also puts pressure on margins.
Michael Kors also generates a large portion of its sales outside the United States. Its broad international exposure leaves them especially prone to currency headwinds. The strength of the dollar could also be mentioned if we see margins and profitability contract this quarter. Fortunately, the bar is set pretty low so it is not impossible for the company to top expectations and see a pop in the stock.
Do you think KORS can beat estimates? There is still time to get your estimate in here!
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