Michael Kors shares plunged more than 11 percent after the handbag maker recorded weaker sales at its retail stores in Europe during the fiscal second quarter, making this the first time in almost two years that Kors missed analysts’ quarterly revenue expectations.
The stock was heading toward a one-year low in premarket trading Wednesday on the news.
Kors said net income fell during the quarter to $137.6 million, or 91 cents per share, from $202.9 million, or $1.32 per share, a year ago. Excluding one-time items, the retailer earned $1.27 a share, better than the $1.10 expected by analysts surveyed by Refinitiv.
Total revenue rose 9.3 percent to $1.25 billion, slightly missing analysts’ average estimate for $1.26 billion.
The company has been trying to cut back excess inventory at its stores in Europe where rival brands like LVMH and Kering have gained in popularity.
CEO John Idol said in a statement that Kors’ recently announced plans to acquire Versace is “setting the stage for accelerated revenue and earnings growth.” The company announced the $2.1 billion deal in September. After the deal closes, Kors will also be changing its name to “Capri Holdings.”
Kors said during the latest quarter, the Jimmy Choo brand — which it acquired last November — delivered stronger sales than anticipated thanks to strength in footwear. Because of this, the company raised its adjusted earnings outlook for the fiscal year by $0.05 to a range of $4.95 to $5.05. It still expects total revenue to be about $5.125 billion, with same-store sales being down in the low single digits.