New offerings help Michael Kors sales and profit beat expectations
(Reuters) - Handbag and accessories maker Michael Kors Holdings Ltd (KORS.N: Quote), one of hottest names in "affordable luxury", reported better-than-expected second-quarter sales and profit, helped by new offerings such as cross-body satchels and large wallets.
New store openings also helped sales rise nearly 7 percent in the three months ended Sept. 26, in line with the first quarter but a far cry from the growth rates of 30 percent or more the company regularly achieved since going public in 2011.
Kors, whose shares were up 2.5 percent in early trading on Wednesday, has been expanding rapidly, leading to brand fatigue in an intensely competitive market, analysts have said.
Kors has also been offering deep discounts, which has eroded its brand appeal.
The company, which has traditionally appealed to women over the age of 25, is now expanding its digital platforms to attract younger shoppers.
Kors' same-store sales fell 8.5 percent in the latest quarter, which the company blamed on lower mall traffic in North America and weak demand for watches.
Analysts had expected a fall of 8.9 percent, according to research firm Consensus Metrix.
Kors also said its board authorized an increase of $500 million to its share buyback program, raising the total to $2 billion.