=Michael Kors (KORS) reported earnings on Tue 7 Feb 2017 (b/o)

Michael Kors reports EPS in-line, misses on revs; guides Q4 EPS and revenue below consensus :

• Reports Q3 (Dec) earnings of $1.64 per share, in-line with the Capital IQ Consensus of $1.64; revenues fell 3.2% year/year to $1.35 bln vs the $1.37 bln Capital IQ Consensus. Retail net sales increased 9.2% to $836.7 million driven primarily by 193 net new store openings since the end of the third quarter of fiscal 2016, including 143 stores associated with the Company's recent acquisitions of the previously licensed operations in Greater China and South Korea.
• Comparable sales decreased 6.9% vs. mid-single digit decline guidance. On a constant currency basis, retail net sales increased 10.0%, and comparable sales decreased 6.4%. Wholesale net sales decreased 17.8% to $473.1 million and on a constant currency basis, wholesale net sales decreased 17.5%. Licensing revenue decreased 22.9% to $43.0 million.
• Total revenue in the Americas decreased 7.4% to $983.8 million on a reported basis and decreased 7.5% on a constant currency basis. European revenue decreased 7.0% to $256.7 million on a reported basis, and decreased 2.7% on a constant currency basis. Revenue in Asia increased 89.1% to $112.3 million on a reported basis, and increased 84.0% on a constant currency basis, largely driven by the Company's recent acquisitions of the previously licensed operations in Greater China and South Korea.
• Gross profit decreased 3.1% to $805.7 million, and as a percentage of total revenue was 59.6%. Foreign currency translation and transaction favorably impacted gross profit margin by ~30 basis points. This compares to gross margin of 59.5% in the third quarter of fiscal 2016.
• Operating margin -400 bps to 25.3% vs. 25% guidance.
• Co issues downside guidance for Q4, sees EPS of $0.68-0.72 vs. $0.94 Capital IQ Consensus Estimate; sees Q4 revs of $1.035-1.055 bln vs. $1.11 bln Capital IQ Consensus, which includes a planned reduction in wholesale shipments, and a comparable sales decrease in the low-teens range. The Company expects operating margin to be ~14.0%.