(Reuters) - Michael Kors Holdings Ltd (KORS.N) reported robust quarterly results as its namesake luxury brand saw strong demand, and said it expects its accessories business to drive profits in the coming quarters.
Shares of the designer apparel and accessories company jumped 26 percent to $42.19 on Tuesday on the New York Stock Exchange, their highest since the stock’s December 15 debut.
The stock, which had risen 39 percent through Monday’s close, was trading up 22 percent at $41.25 in late morning trade. It was the biggest percentage gainer on the exchange.
Chief Executive John Idol attributed the quarterly performance to “the strong demand for the Michael Kors luxury brand, our exciting assortment of fashion merchandise and our exceptional jet-set in-store experience.”
Last week, larger rival Ralph Lauren Corp (RL.N) also reported strong results for the holiday quarter, helped by double-digit sales growth at its own stores as well as increased sales to department stores.
The luxury goods industry has rebounded strongly after the sharp downturn of 2009, and watchmakers, luxury hotels, fashion and leather goods groups were widely expected to close 2011 on a strong note.
Michael Kors, which is known for its glitzy designs and primarily caters to women in the 30-40 age group, expects a fourth-quarter profit of 10 cents to 12 cents a share.
Wall Street analysts were looking for earnings of 11 cents a share, according to Thomson Reuters I/B/E/S.
“I think it’s a conservative guidance and sets them up for a beat in the fourth quarter,” Wedbush Securities analyst Corinna Freedman told Reuters.
The company, named after its founder Michael Kors who is one of the judges on the long-running TV fashion show “Project Runway,” said same-store sales grew 38 percent in the third quarter.
“Comps accelerated significantly in December, driven by traffic increases and increase in conversion,” Nomura Equity Research analyst Paul Lejuez wrote in a note.
Third-quarter revenue was driven by higher sales of luxury leather accessories, such as handbags and small leather goods, and watches.
Revenue at Michael Kors’ Europe market tripled on a 34 percent jump in same-store sales and the company said it was cautiously encouraged by the results in its wholesale operations business in Japan, which is in the startup phase.
“The growth is coming from new markets like Europe and Japan,” Wedbush’s Freedman said.
She expects the momentum in the watches category to continue in the fourth quarter as well.
As of December 31, 2011, Michael Kors operated 231 retail stores, including concessions, up from 156 retail stores a year ago.
The company had said at the time of its listing that it intended to more than double its store count in North America, and have about 100 stores each in Europe and Japan.
It reported a third-quarter profit of $39 million, or 20 cents a share, compared with $27.8 million, or 16 cents a share, a year ago.
Revenue rose 68 percent to $373.6 million.
Reporting by Meenakshi Iyer in Bangalore; Editing by Maju Samuel, Sriraj Kalluvila