- Angela Gonzalez-Rodriguez |
Inditex continues with its supply strategy, following the trail of other heavyweights in the sector such as LVMH or Chanel and incorporating its suppliers into its investment portfolio.
In fact, Inditex already controls 100 percent of the capital of Indipunt SL, its largest supplier. The firm based in Arteixo appears in the Mercantile Registry as a sole proprietorship whose sole shareholder is Inditex.
It should be recalled that, to date, Inditex controlled 51 percent of the capital in Indipunt. The group created by Amancio Ortega invested for the first time in the tricot company in 1997, acquiring a controlling stake in Indipunt in 1997.
Indipunt SL registered 71,341,280 euros of sales in 2015, obtaining the first position in the Spanish newspaper ‘El Economista’ Ranking of Companies of the category.
- Angela Gonzalez-Rodriguez |
ANALYSISMany have cherished this weekend that American Apparel is finally back after a year of ups and downs that ended up with the Canadian brand Gildan acquiring the troubled fashion brand last January for 88 million dollars.
Fast-forward six months and the renewed retailer is back, online and dialling back the ‘American’ side of things. Six months ago Gildan bought American Apparel’s intellectual property, leaving its operations divisions behind – the Canadian retail group actually acquired Don Charney’s brainchild’s intellectual property, that’s the name, brand, and designs.
So, how does the ‘new’ American Apparel look like? “Globally Sourced, Ethically Made, Still Sweatshop Free. That’s American Apparel,” according to the new web. A web that looks pretty much the same than the former Charney’s American Apparel.
Truly ‘American’ apparel limited to eight garments made in the U.S.
The most noticeable difference is that loyal American apparel’s fans can still but a limited collection – made of eight different garments – actually manufactured in the U.S. and pay a premium (average price is 20 percent higher for this truly ‘American’ garments than other similar ones manufactured in any of the international factories owned by Gildan Activewear.)
Market sources told FashionUnited that other difference, less obvious, was that even if the photography bears a large resemblance with older American Apparel campaigns, this new look and feel “is less saucy.”
The reasons why Gildan’s executives are not concerned about Charney’s new fashion label
In the meantime, American Apparel’s founder Don Charney has also made a comeback with a quite similar first collection for its ‘Los Angeles Apparel’.
Commenting on the potential shadow that Charney’s latest venture could throw on American Apparel rebirth, a spokesperson for Gildan told ‘Business Insider’ that “The fashion basics business is crowded already with lots of brands. The only time we would ever become concerned is if something he was doing was seen to be infringing on any of our intellectual our property rights or purposely misleading consumers into believing the apparel he is selling is American Apparel."
Earlier this month, Gildan’s CEO Glenn Chamandy expressed confidence that the American Apparel brand purchase “will be one of the best acquisitions this company has ever made in terms of investment. At the end of the day, we will do very well with this brand.”
The Canadian retailer issued its second-quarter figures at the beginning of August, indicating that “Sales reflected the impact of contributions from acquisitions, which came in as expected, with progress on integration activities well on plan.”
Photo: American Apparel Web
- Vivian Hendriksz |
London - The wearable device market is expected to hit over 150 billion US dollars in sales annually by 2027, according to new research from IDTechEx. New advancements in wearable technology are being fuelled by increasing global interest, leading to numerous companies investing in new product development, including the likes of Nike and Apple.
Fitness trackers, smartwatches and smart eyewear (including VR and AR) remain the leading products within the wearables market, although some of these products may face difficulties growing in the future. Take fitness trackers for example, which are able to measure body functions during moments of physical activity and share the gathered data with the user via their smartphone. Once the most popular wearable, the market for fitness tracker is reaching its saturation point. In addition, as smartwatches, such as the Apple Watch and the Motorola Moto 360, continue to catch up the capabilities offered by fitness trackers, fitness tracker companies are struggling to keep pace. Market fitness tracker leader Fitbit experience close to a 40 percent decrease in revenue over recent quarters, and Jawbone is currently undergoing liquidation.
However, Fitbit has managed to retain momentum after acquiring smartwatch company Pebble and expects its new smartwatch to deliver key results. “Our smartwatch, which we believe will deliver the best health and fitness experience in the category, is on track for delivery ahead of the holiday season and will drive a strong second half of the year,” said James Park, CEO of Fitbit in a statement in the company Q2 results. “In the long term, we are confident in our vision for the future and are uniquely positioned to succeed by leveraging our brand, community, and data to drive positive health outcomes.” Smartwatches and fitness trackers remain the largest segment for wearables, accounting for more than 80 percent of shipments in 2016, according to a report from Tractica.
However, their shared market segment is predicted to decrease down to 50 percent by 2022. Body sensors, which can also be used in smart clothing, are predicted to become the third largest wearable device segment by 2022. This development is likely to be driven by wearable patches used in healthcare applications, as body sensor shipments are estimated to reach 92.1 million by 2022. Health-focused applications are currently pushing the next phase of growth in wearables, which are moving outside of fitness and activity trackers to devices which can help prevent and manage chronic health conditions.
Photo: Fitibi, via website
- Prachi Singh |
On a reported basis, Gap said second quarter fiscal year 2017 diluted earnings per share were 0.68 dollar and 0.58 dollar on an adjusted basis, excluding a 0.10 dollar benefit from insurance proceeds related to the Fishkill fire. Gap’s comparable sales were up 1 percent versus a 2 percent decrease last year, while net sales for the quarter were 3.80 billion dollars compared with 3.85 billion dollars for the second quarter of fiscal year 2016.
“With a third consecutive quarter of comp sales growth, we are seeing our investments in product, customer experience, and brand equity begin to pay off. Based on the strength of the first half, we are pleased to increase our full year earnings guidance,” said Art Peck, President and CEO, Gap Inc. in a press release.
Comparable sales results of the brand portfolio
The company reported positive 5 percent comparable sales at Old Navy Global versus flat last year, negative 1 percent at Gap Global versus negative 3 percent last year and negative 5 percent at Banana Republic Global versus negative 9 percent last year.
Gap added that the translation of foreign currencies into US dollars negatively impacted the company’s net sales by about 37 million dollars.
Gap updates FY17 earnings outlook
The company updated its reported diluted earnings per share guidance for fiscal year 2017 to be in the range of 2.12 dollars to 2.20 dollars. Excluding the benefit from insurance proceeds related to the Fishkill fire of about 0.10 dollar, the company expects its adjusted diluted earnings per share to be in the range of 2.02 dollars to 2.10 dollars.
The company continues to expect comparable sales for fiscal year 2017 to be flat to up slightly and net sales to be slightly below this range driven by an expected negative impact from foreign currency fluctuations year-over-year as well as the impact from international closures in fiscal year 2016.
The company paid a dividend of 0.23 dollar per share during the second quarter of fiscal year 2017. In addition, on August 10, 2017, the company announced that its board of directors authorized a third quarter dividend of 0.23 dollar per share.
Gap ended the quarter with 3,642 store locations in 47 countries, of which 3,179 were company-operated. The company continues to expect store count to be about flat at the end of fiscal year 2017 compared with fiscal year 2016.
- Prachi Singh |
L Brands earnings per share for the second quarter ended July 29, 2017, were 0.48 dollar compared to 0.87 dollar for the quarter ended July 30, 2016. Second quarter operating income was 300.9 million dollars against 408.2 million dollars last year, and net income was 138.9 million dollars compared to 252.4 million dollars last year.
The company said, reported results above include a pre-tax gain of 108.3 million dollars or 0.24 dollar per share in 2016, related to a cash distribution from Easton Town Center; and a pre-tax charge of 35.8 million dollars or 0.08 dollar per share related to the early extinguishment of the company’s July 2017 notes. Excluding the significant items above, adjusted second quarter earnings per share decreased 31 percent to 0.48 dollar compared to 0.70 dollar last year, and adjusted net income was 138.9 million dollars compared to 204.7 million dollars last year.
Q2 comparable sales decline 8 percent
The company reported net sales of 2.755 billion dollars for the second quarter compared to sales of 2.890 billion dollars for the second quarter ended July 30, 2016. The company reported a comparable sales decrease of 8 percent and said that the exit of the swim and apparel categories had a negative impact of about 6 percentage points and 9 percentage points to total company and Victoria’s Secret comparable sales, respectively.
Since the second quarter comparable sales decline of 8 percent was below the company’s expectations, L Brands said, accordingly, the company’s guidance for the remainder of the year reflects a more conservative sales forecast than its previous guidance. The company updated its guidance for 2017 full-year earnings per share to 3 to 3.20 dollars from 3.10 to 3.40 dollars previously, and issued guidance for third quarter earnings per share between 0.25 dollar and 0.30 dollar.
Picture:L Brands website
- Prachi Singh |
Fourth quarter net sales at Coach totalled 1.13 billion dollars compared to 1.15 billion dollars in the prior year. Net income on a reported basis was152 million dollars, with earnings per diluted share of 0.53 dollar compared to 82 million dollars with earnings per diluted share of 0.29 dollar in the last year’s fourth quarter.
Victor Luis, CEO of Coach, Inc., said in a media statement, “Our strong fourth quarter results – in which we achieved mid-single-digit North America comparable store sales for the Coach brand and drove solid growth at Stuart Weitzman - capped an excellent FY17 performance for the company. For the year, we posted a double-digit increase in net income as we continued to make progress on our brand and company transformation plan. We also took a major step in our corporate transformation with the acquisition of Kate Spade & Company, which closed in July, becoming the first New York-based house of modern luxury lifestyle brands.
Coach strategic plan impacts Q4 net sales
Excluding the additional week included in fiscal 2016 results, net sales increased 6 percent on a reported and 7 percent on a constant currency basis. The company said that as planned, its strategic decision to elevate the Coach brand’s positioning in the North American wholesale channel through a reduction in promotional events and door closures negatively impacted sales growth by approximately 60 basis points in the quarter.
Gross profit totalled 755 million dollars on a reported basis, while gross margin for the quarter was 66.5 percent on a reported basis compared to 67.8 percent in the prior year. On a non-GAAP basis, gross profit totalled 757 million dollars, while gross margin was 66.8 percent as compared to 67.8 percent in the prior year.
Operating income for the quarter on a reported basis totalled 193 million dollars, while operating margin was 17percent versus 10.1percent in the prior year. On a non-GAAP basis, operating income was 180 million dollars, while operating margin was 15.8 percent, including approximately 180 basis points versus 15.1 percent in last year’s fourth quarter.
On a non-GAAP basis, net income for the quarter totalled 142 million dollars, with earnings per diluted share of 0.50 dollar compared to 126 million dollars with earnings per diluted share of 0.45 dollar, including 0.07 dollar associated with the additional week, last year.
Coach brand Q4 net sales down 5 percent
Net sales for the Coach brand totalled 1.05 billion dollars for the fourth quarter compared to 1.07 billion dollars in the prior year. Excluding the additional week included in fiscal 2016 results, the company said, net sales increased 5 percent on a reported basis and 7 percent on a constant currency basis.
Total North American Coach brand sales were 586 million dollars versus 606 million dollars last year, including 44 million dollars associated with additional week of sales in the prior fiscal year. On a 13-week versus 13-week basis, total North American Coach brand sales increased 4 percent over prior year, while North American direct sales rose 5 percent on a dollar basis and 6 percent on a constant currency basis for the quarter. Both North American aggregate and bricks and mortar comparable store sales rose approximately 4 percent. Coach said, as planned, sales at North American department stores declined approximately 40 percent at a POS and approximately 20 percent on a net sales basis as the company has now started to anniversary the pullback in shipments into the channel.
International Coach brand sales were 442 million dollars as compared to 450 million dollars last year, including approximately 32 million dollars associated with additional week of sales in the prior fiscal year. On a 13-week versus 13-week basis, total sales increased 6 percent in dollars and 9percent on a constant currency basis. Greater China sales increased 3 percent versus prior year in dollars and 7percent in constant currency on a 13-week basis, driven by double-digit growth and positive comparable store sales on the Mainland, offset, in part, by softness in Hong Kong and Macau.
In Japan, on a 13-week basis, sales declined 3percent in dollars and approximately 1percent in constant currency. Sales for the remaining directly operated businesses in Asia, the company added, decreased mid-single digits in dollars and declined similarly in constant currency on a 13-week basis, due primarily to weakness in Korea where macroeconomic and geopolitical headwinds continued to pressure spending from domestic consumers and tourists.
Europe performed well on a 13-week versus 13-week basis, driven by double-digit growth in the directly operated channels and benefiting from the planned shift in wholesale shipment timing as previously announced. As expected, international wholesale increased on a net sales basis due to shipment timing, while POS sales declined as weaker tourist location results offset domestic growth.
Gross profit for the Coach brand totalled 705 million dollars on both a reported and non-GAAP basis. Gross margin for the quarter was 67.4 percent, including approximately 20 basis points of pressure from currency, as compared to 68.8percent in the prior year period on both a reported and non-GAAP basis reflecting, in part, the anticipated negative impact of channel mix.
Stuart Weitzman Q4 net sales up 15 percent
Net sales for the Stuart Weitzman brand totalled 88 million dollars for the fourth quarter compared to 84 million dollars reported in the same period of the prior year. Excluding the additional week included in fiscal 2016 results, net sales increased 15 percent on a reported basis and 16 percent on a constant currency basis.
Gross profit for the Stuart Weitzman brand totalled 49 million dollars on a reported basis, while gross margin for the quarter was 56.2 percent as compared to 54.8percent in the prior year. On a non-GAAP basis, gross profit totalled 52 million dollars, while gross margin was 58.9 percent as compared to 55.2percent in the prior year period.
Full year net income rises to 591 mn dollars
Net sales totalled 4.49 billion dollars for fiscal year 2017 as compared to 4.49 billion dollars in the prior year. Excluding the additional week included in fiscal 2016 results, net sales increased 2percent on both a reported and constant currency basis.
As planned, the company said, its strategic decision to elevate the Coach brand’s positioning in the North American wholesale channel through a reduction in promotional events and door closures negatively impacted sales growth by approximately 150 basis points in fiscal 2017. Gross profit totalled 3.08 billion dollars on a reported basis, while gross margin for the year was 68.6percent as compared to 67.9percent in the prior year. On a non-GAAP basis, gross profit also totalled 3.08 billion dollars, while gross margin was 68.7percent compared to 68 percent in the prior year.
Net income was 591 million dollars on a reported basis, with earnings per diluted share of 2.09 dollars compared to reported net income in the prior year of 461 million dollars with earnings per diluted share of 1.65 dollars. On a non-GAAP basis, net income was 609 million dollars with earnings per diluted share of 2.15 dollars compared to 552 million dollars a year ago with earnings per diluted share of 1.98 dollars, including 0.07 dolla associated with the additional week.
The company also announced that its board of directors declared a quarterly cash dividend of 0.3375 dollar per common share, maintaining an annual rate of 1.35 dollars.
Coach expects 30 percent rise in FY18 revenue
The company expects revenues for fiscal 2018 to increase about 30 percent versus fiscal 2017, to 5.8 to 5.9 billion dollars, with low-single digit organic growth and the acquisition of Kate Spade adding over 1.2 billion dollars in revenue.
In addition, the company is projecting operating income growth of 22 percent to 25 percent driven by mid-single digit organic growth, the acquisition of Kate Spade, and estimated synergies of 30-35 million dollars. Taken together, the Kate Spade business and resulting synergies are expected to contribute approximately 130-140 million dollars to operating income.
Overall, the company is projecting earnings per diluted share in the range of 2.35 dollars-2.40 dollars, an increase of about 10 percent to 12 percent for the year, including low-to-mid- single digit accretion from the acquisition of Kate Spade, consistent with the previously communicated forecast.
- Prachi Singh |
Delta Galil Industries reported sales of 340.5 million dollars for the second quarter of 2017, a 36 percent increase from 249.5 million dollars for the same quarter of 2016. Excluding Delta Galil Premium Brands (DGPB), sales increased by 9 percent. The company’s sales for the first six months of 2017 were 656.1 million dollars, up 30 percent from 506.2 million dollars in the same six-month period of 2016. Excluding DGPB, sales increased by 3 percent.
Commenting on the positive trading, Isaac Dabah, CEO of Delta Galil, stated in a company statement: “Delta Galil delivered an exceptionally strong performance in the second quarter, reflecting double-digit growth on the top- and bottom-line. During the quarter, we saw significant growth in Delta Galil USA, mainly kids and activewear categories and in the global upper market. Looking ahead, we are focused on growing our international and e-commerce businesses, while continuing to pursue strategic acquisition opportunities.”
Q2 operating profit increased 31 percent at Delta Galil
Operating profit for the second quarter was 17.7 million dollars, a 31percent increase from 13.5 million dollars in the second quarter last year. For the first six months, operating profit before one-time items was 30.6 million dollars, an 8 percent increase from 28.4 million dollars a year earlier. Operating profit in the first six months was 27.9 million dollars, down 2 percent driven by restructuring expenses included in the first quarter for the DGPB segment.
Net income attributable to shareholders was 8.9 million dollars in the second quarter, representing a 14 percent increase and 14.5 million dollars compared to 15.7 million dollars in the first half, representing an 8 percent decrease. Net income excluding one-time items attributable to shareholders for the first six months increased 3 percent to 16.1 million dollars.
Diluted earnings per share increased 15 percent and amounted to 0.35 dollar for the second quarter, compared to 0.30 for the same quarter last year. For the first six months, diluted earnings were 0.57 dollars, compared to 0.61 dollar for the same period of 2016, representing a 7 percent decrease. Diluted earnings per share excluding one-time items in the first six months increased by 4percent to 0.63 dollar.
EBITDA for the quarter was 25.5 million dollars or 7.5 percent and 44.6 million dollars in the first six months period. The company declared a dividend of 4.25 million dollars or 0.167 dollar per share.
Delta Galil confirm 2017 financial guidance
Delta Galil reaffirmed its 2017 financial guidance, excluding non-recurring items which is based on current market conditions and current exchange rate of 1.14 dollars per euro and 3.60 NIS per dollar. Full-year sales are expected to range between 1,330 million dollars-1,370 million dollars, representing an increase of 13percent-16 percent. EBIT is expected to range between 86 million dollars-91 million dollars, representing an increase of 3percent-9percent and EBITDA is expected to range between 113 million dollars-118 million dollars, representing an increase of 6percent-10percent.
Full-year net income is expected to range between 50 million dollars-52 million dollars, representing an increase of 6percent-10percent and diluted EPS is expected to range between 1.95 dollars-2.02 dollars, representing an increase of 5percent-9percent.
Picture:Facebook/7 For All Mankind
- Prachi Singh |
Crocs said, second quarter revenues reached 313.2 million dollars. On a constant currency basis, revenues decreased 2.7 percent, compared to the second quarter of 2016. Net income attributable to common stockholders was 18.1 million dollars or 0.20 dollar per diluted share. Excluding 1.8 million dollars related to SG&A reduction initiatives, the company reported non-GAAP net income of 19.9 million dollars compared 11.7 million dollars or 0.13 dollar per diluted share and non-GAAP adjusted net income of 12 million dollars.
“During the second quarter, we continued to revitalize the Crocs brand and drive improvement in the quality of our revenues. We are optimistic about the early response to our fall/holiday 2017 collection, and anticipate that the positive sentiment seen to date will continue throughout the second half of the year, despite the challenging retail environment," said Andrew Rees, Crocs President and Chief Executive Officer in a press release.
Second quarter highlights and outlook
Second quarter gross margin rose 180 basis points to 54.2 percent compared to last year’s second quarter. The company said, improved product and better management of inventory enabled it to generate higher quality revenues and that it also benefited from the continued shift toward more molded product.
For the third quarter, the company expects revenues to be between 230 and 240 million dollars and gross margin to be essentially flat to the third quarter of 2016 since gross margin in the third quarter of 2016 included a benefit of more than 200 basis points due to a favorable inventory adjustment.
The company continues to expect 2017 revenues to be down low single digits compared to 2016 gross margin to be approximately 50 percent.
- Prachi Singh |
Ralph Lauren reported earnings per diluted share of 0.72 dollar on a reported basis and 1.11 dollars on an adjusted basis, excluding restructuring-related and other charges that were primarily related to activities associated with the company’s Way Forward plan, for the first quarter of fiscal 2018. This compares to loss per diluted share of 0.27 dollar on a reported basis and earning of 1.06 dollars on an adjusted basis, excluding restructuring-related and other charges, for the first quarter of fiscal 2017.
“While we are addressing challenges in our business, we have significant opportunity ahead and we’re moving forward with urgency,” said Patrice Louvet, President and CEO in a statement, adding, “We are continuing to build a strong foundation for future growth, as evidenced by our progress this quarter on the key elements of the Way Forward plan.”
First quarter revenues decline 13 percent
In the first quarter, revenue decreased by 13 percent to 1.3 billion dollars on a reported basis and 12 percent in constant currency, driven by distribution and brand exits, a strategic reduction in shipments and promotional activity to increase quality of sales, as well as due to lower consumer demand. The company said, first quarter revenue decline is in line with the company’s guidance of down low double-digits excluding 225 basis points of negative foreign currency impact. Foreign currency pressured the first quarter revenue growth by approximately 130 basis points.
North America revenue in the first quarter decreased 17percent to 710 million dollars due to lower sales in both the retail and wholesale channels, driven by distribution and brand exits, a strategic reduction in shipments and promotional activity to increase quality of sales, as well as due to lower consumer demand. On a constant currency basis, comparable store sales in North America were down 8 percent, including a 4 percent decline in brick and mortar stores and a 22 percent decrease in e-commerce.
Europe revenue decreased 14 percent to 323 million dollars on a reported basis and 10 percent in constant currency driven by shifts in timing of shipments in wholesale, brand exits, and reduced markdowns to improve quality of sales. On a constant currency basis, comparable store sales in Europe were down 8 percent, including an 8 percent decline in brick and mortar stores and a 5 percent decline in e-commerce.
Revenues in Asia decreased 1percent on a reported basis to 209 million dollars and increased 1percent in constant currency. Comparable store sales increased 2percent in constant currency driven by higher traffic.
Ralph Lauren reposts net income growth in Q1
Gross profit was 851 million dollars on a reported basis and 852 million dollars on an adjusted basis, excluding approximately 1 million dollars of inventory charges related to restructuring activities. Gross margin was 63.2 percent on both a reported and adjusted basis, 210 basis points above the prior year on an adjusted basis.
On a reported basis, net income in the first quarter was 60 million dollars or 0.72 dollar per diluted share. On an adjusted basis, net income was 91 million dollars or 1.11 dollars per diluted share, excluding restructuring-related and other charges. This compared to a net loss of 22 million dollars or 0.27 dollar per diluted share on a reported basis, and net income of 90 million dollars or 1.06 dollars per diluted share on an adjusted basis, for the first quarter of fiscal 2017.
“I am thrilled to welcome Patrice Louvet as my partner to continue the exciting evolution of our company,” said Ralph Lauren, Executive Chairman and Chief Creative Officer in a media release, adding, “Patrice has the enthusiasm to discover what has made our brand so iconic and the capability to evolve our business.”
FY18 revenues expected to be down 8-9 percent
For fiscal 2018, the company continues to expect net revenue to decrease 8 percent to 9 percent, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have minimal impact on revenue growth in fiscal 2018; this is more favourable than the previous guidance of 150 basis points of negative impact given recent movements in foreign exchange rates.
In the second quarter, the company expects net revenue to be down 9-10 percent, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have approximately 40 basis points of negative impact on revenue growth in the second quarter of fiscal 2018.
Picture:Ralph Lauren Facebook
- Prachi Singh |
Michael Kors revenues for the three months ended July 1, 2017 decreased 3.6 percent to 952.4 million dollars from 987.9 million dollars in the first quarter of fiscal 2017. On a constant currency basis, the company said, total revenue decreased 2.6 percent. Gross profit for the quarter decreased 2.8 percent to 574.7 million dollars and as a percentage of total revenue was 60.3 percent.
“We are encouraged by our first quarter performance, although we continue to believe that fiscal 2018 will be a transition year for our company, as we focus on laying the foundation for the future by executing on our strategic plan, Runway 2020,” said John D. Idol, the company’s Chairman and CEO in a press statement, adding, "In addition, we are pleased to have recently announced plans to form a global fashion luxury group. Our agreement to acquire Jimmy Choo will bring together two iconic brands that are industry leaders in style and trend."
Financial highlights of the first quarter
Retail net sales increased 10.1percent to 619.9 million dollars, which the company said were driven by 67 net new store openings since the end of the first quarter of fiscal 2017 and the impact of the acquisition of the Greater China license. Comparable sales decreased 5.9 percent. On a constant currency basis, retail net sales increased 11.6 percent, and comparable sales decreased 4.9 percent. Wholesale net sales decreased 23 percent to 303.6 million dollars and on a constant currency basis, wholesale net sales decreased 22.7 percent. Licensing revenue decreased 5.6 percent to 28.9 million dollars.
Total revenue in the Americas decreased 8.2 percent to 634.1 million dollars on a reported basis and 7.9 percent on a constant currency basis. European revenue decreased 10.2 percent to 201.2 million dollars on a reported basis and 7.5 percent on a constant currency basis. Revenue in Asia increased 60.2 percent to 117.1 million dollars on a reported basis and 61.9 percent on a constant currency basis.
Michael Kors added that foreign currency translation and transaction favourably impacted gross profit margin by approximately 10 basis points. This compares to gross margin of 59.9 percent in the first quarter of fiscal 2017. Net income attributable to MKHL was 125.5 million dollars or 0.80 dollar per diluted share. Earnings per diluted share exceeded the company's prior expectations of 0.60 dollar to 0.64 dollar. Net income attributable to MKHL was 147.1 million dollars or 0.83 dollar.
At July 1, 2017, the company operated 838 retail stores, including concessions, compared to 771 retail stores, including concessions, at the end of the same prior-year period. The company had 141 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 979 Michael Kors stores worldwide at the end of the first quarter of fiscal 2018.
Michael Kors expects Q2 comparable sales to decline
For the second quarter of fiscal 2018, the company expects total revenue to be between 1.035 billion dollars and 1.055 billion dollars, which includes a comparable sales decrease in the mid-single digits range. The company expects operating margin to be approximately 14.3 percent and diluted earnings per share are expected to be in the range of 0.80 dollar to 0.84 dollar.
For fiscal 2018, the company expects total revenue to be approximately 4.275 billion dollars and for comparable sales to decrease in the mid-single digits range. Operating margin is expected to be approximately 16 percent and diluted earnings per share are expected to be in the range of 3.62 dollars to 3.72 dollars. The company said, this guidance excludes 40 million dollars to 60 million dollars in one-time costs associated with 20 to 40 store closures in Fiscal 2018.
The company further added that this outlook does not include any expectations related to Jimmy Choo but based on the company’s internal forecasts for Jimmy Choo and assuming a close early in the company’s third fiscal quarter, incremental revenue is expected to be approximately 275 million dollars for the second half of fiscal 2018. For fiscal 2019, the company expects incremental revenues of 570 million dollars to 580 million dollars.
Picture:Michael Kors website