Michael Kors Holding Ltd. recorded a better-than-expected 11 per cent increase in its quarterly revenues, the strongest growth in a year, as the demand for its new products rose in the Americas.
The company’s fourth-quarter revenue rose by 11 per cent to $1.2 billion from previously recorded $1.08 billion, beating analysts’ $1.15 billion average projection.
Sales in the Americas, the company’s biggest market, rose by 4.6 per cent to $879.1 million in the last quarter. The region accounted for almost three-quarters of the business’s total revenue.
Shares of Michael Kors also soared as high as $47.90 before the start of regular trading in New York while shares were valued at $47.50 in pre-market trading on Wednesday.
Michael Kors has been refreshing its product lines faster than other brands, closely managing its wholesale distribution in order to ensure exclusivity of its products.
Recently the company released early summer products—including those that are not available at other retail stores – a strategy that may draw customers into Michael Kors’ stores, according to Wells Fargo & Co. analyst Ike Boruchow.
The company is also breaking into the digital marketplace through online retailing in order to boost its sales growth.
“While there have been pockets of softness for Michael Kors, we have seen brand stability in our survey work,” Erinn Murphy, Piper Jaffray & Co. analyst said in a report. “We continue to believe that markets like Europe as well as China and Japan remain strong for the brand.”
The retailer also said it bought its exclusive licensee in China and some regions in Asia, Michael Kors (HK) Ltd, for $500 million in cash.
“We believe that our brand is gaining strong momentum in Greater China, making it the ideal time for us to integrate this territory into our business,” John Idol, Michael Kors’ Chief Executive Officer said in a statement.
In addition, the company has recently announced a new $1 billion share buyback program, replacing its previous plans. The company said its program had $358.1 million still available as of April 2.
The company has been trying to battle the weak demand from Nordstrom Inc. and Macy’s Inc., department-store companies, who reported slow-moving sales for handbags. The company’s wholesale partners have also been lowering their prices to clear a backlog of out-of-style products.
Meanwhile, Michael Kors’s said it expects profits to be at $4.56 to $4.64 per share during the year through March 2017, the London-based company said in a statement on Wednesday. Analysts projected a profit of $4.51 per share on the average.