(Reuters) - Handbag and accessories maker Michael Kors Holdings Ltd KORS.N, 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.
Rival Coach Inc COH.N also reported a better-than-expected profit last week as its efforts to shed its staid image and woo back customers with new products started to pay off.
Kate Spade & Co KATE.N reports on Thursday.
Kors forecast revenue of $1.33 billion-$1.35 billion and earnings of $1.44-$1.48 per share for the current quarter ending December, both of which were below analysts’ expectations.
Net income attributable to the company fell to $193.1 million in the latest quarter, from about $207 million a year earlier.
On a per-share basis, earnings rose to $1.01 from $1.00, due to fewer shares outstanding. Revenue rose to $1.13 billion from $1.06 billion.
Analysts on average had expected earnings of 89 cents per share and revenue of $1.08 billion, according to Thomson Reuters I/B/E/S.
Up to Tuesday’s close of $39.32, Kors’ shares had fallen about 48 percent this year.
Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila and Ted Kerr