Michael Kors' growth spurt pressurizes profit margin

Michael Kors' growth spurt pressurizes profit margin

American jet-set fashion brand Michael Kors has had a 54 % turnover growth in the past quarter, thanks to a large number of new stores and the brand's increasing popularity. Profit margins have dropped because of increased costs.

Quarterly turnover up 54 %

Michael Kors is doing very well, as the demand for its luxurious fashion accessories and watches is growing, both in its own stores (405 compared to 304 one year ago) and in department stores across the United States and Europe.

 

Its quarterly turnover (up until 29 March) reached 917.5 million dollars, nearly 675 million euro, a 54 % increase. American turnover grew 43 % to 739.97 million dollars, while European turnover more than doubled (+125.3 %) to 164.65 million dollars.

 

The like-for-like turnover grew 26 % (20.6 % in the United States, 62.7 % in Europe), which means it outperformed analysts' expectations at 21 %, the tenth quarter in a row Michael Kors has beaten those expectations.

 

There is a downside to all this positive news: the gross profit margin is "slightly lower", both for the quarter and for the year, while the operational costs "have grown a bit", the company stated during a conference call.

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