Michael Kors Holdings Limited Announces Fourth Quarter and Annual Fiscal 2013 Results

Michael Kors Holdings Limited (NYSE:KORS) (the “Company”), a global luxury lifestyle brand, today announced its financial results for the fourth quarter and fiscal year ended March 30, 2013.

John D. Idol, the Company’s Chairman and Chief Executive Officer, said, “Fiscal 2013 was another outstanding year for Michael Kors with continued momentum into the fourth quarter reflecting advances on our key growth strategies. Our jet-set luxury accessories and ready to wear are resonating with consumers worldwide and we are excited by our prospects for future growth.”

For the fourth quarter ended March 30, 2013:

• Total revenue increased 57.1% to $597.2 million from $380.0 million in the fourth quarter of fiscal 2012.
• Retail net sales increased 58.8% to $272.7 million driven by a 36.7% increase in comparable store sales and 67 net new store openings since the end of the fourth quarter of fiscal 2012. Wholesale net sales increased 59.4% to $304.7 million and licensing revenue increased 15.7% to $19.8 million.
• Gross profit increased 62.6% to $356.2 million, and as a percentage of total revenue increased to 59.7% compared to 57.7% in the fourth quarter of fiscal 2012.
• Income from operations was $155.3 million and as a percentage of total revenue was 26.0%. For the fourth quarter of fiscal 2012, income from operations was $78.8 million and included a $2.0 million reimbursement of professional fees associated with the Company’s initial public offering (“IPO”) in December 2011. Excluding this credit, operating income for the fourth quarter of fiscal 2012 was $76.8 million or 20.2% as a percentage of total revenue.
• Net income was $101.1 million, or $0.50 per diluted share, based on 203.8 million weighted average diluted shares outstanding. Net income for the fourth quarter of fiscal 2012 was $43.6 million, or $0.22 per diluted share, based on 196.9 million weighted average diluted shares outstanding. Excluding the aforementioned credit, net income for the fourth quarter of fiscal 2012 was $41.6 million, or $0.21 per diluted share.
• At March 30, 2013, the Company operated 304 retail stores, including concessions, compared to 237 retail stores, including concessions, at the end of the same prior-year period. The Company had 96 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 400 Michael Kors stores worldwide at the end of the fourth quarter of fiscal 2013.

Mr. Idol continued, “Our robust fourth quarter results were driven by continued strength across all of our business segments and geographies. North American comparable store sales increased 35%, reflecting the increasing demand for our luxury brand, our exciting product assortment and our exceptional jet-set in-store experience. Sales in our North America wholesale segment increased 57%, reflecting comparable store sales growth as well as the continued conversion to shop-in-shops in department stores. In Europe, sales nearly doubled during the quarter, with continued expansion of brand awareness leading to 63% comparable store sales growth. Finally, in our licensing segment, revenue increased 16%, driven primarily by the ongoing strength in watches and eyewear. Overall, we believe that the Michael Kors luxury brand is ideally positioned within the global luxury lifestyle market and we look forward to continuing to advance on our long-term objectives in fiscal 2014 and beyond.”

For the fiscal year ended March 30, 2013:

• Total revenue for the year increased 67.5% to $2.2 billion from $1.3 billion in fiscal 2012.
• Retail net sales increased 69.5% to $1.1 billion. Comparable store sales increased 40.1%. Wholesale net sales increased 69.2% to $1.0 billion and licensing revenue increased 33.5% to $87.0 million.
• Gross profit for the year increased 73.5% to $1.3 billion, and as a percentage of total revenue increased to 59.9% as compared to 57.8% in fiscal 2012.
• Income from operations for the year was $630.0 million and as a percentage of total revenue was 28.9%. For fiscal 2012, income from operations was $247.7 million and included a $10.6 million equity compensation charge associated with equity grants for periods prior to fiscal 2012, $3.2 million in expenses associated with the Company’s IPO in December 2011 and a $10.7 million charge related to the employee share option redemption associated with our private placement. Excluding these charges, income from operations for fiscal 2012 was $272.1 million, or 20.9% as a percentage of total revenue.
• Net income for the year was $397.6 million, or $1.97 per diluted share, based on 201.5 million weighted average diluted shares outstanding. Net income for fiscal 2012 was $147.4 million, or $0.78 per diluted share, based on 189.3 million weighted average diluted shares outstanding. Excluding the aforementioned charges, net income for fiscal 2012 was $163.1 million, or $0.86 per diluted share.

Outlook

For the first quarter of fiscal 2014, the Company expects total revenue to be in the range of $555 million to $565 million. This assumes a comparable store sales increase of approximately 20%. Diluted earnings per share are expected to be in the range of $0.46 to $0.48 for the first quarter of fiscal 2014. This assumes 204.0 million diluted weighted average shares outstanding and a 36% tax rate.

For fiscal 2014, the Company expects total revenue to be in the range of $2.65 billion to $2.75 billion. This assumes a comparable store sales increase in the range of 15% to 20%. Diluted earnings per share are expected to be in the range of $2.43 to $2.47 for fiscal 2014. This assumes 204.8 million diluted weighted average shares outstanding and a 36% tax rate.

Conference Call Information

A conference call to discuss fourth quarter results is scheduled for today, May 29, 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 5780735. 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 20-F for the fiscal year ended March 31, 2012 (File No. 001-35368), filed on June 12, 2012 with the U.S. Securities and Exchange Commission, as updated by the risk factors set forth in the Company's Registration Statement on Form F-3 (File No. 333-186745), filed on February 19, 2013.