* Forecasts Q4 profit of $0.68-$0.72/shr vs est $0.93
* Q3 comp sales decline 6.9 pct vs est 4.9 pct decline
* Shares fall to lowest in more than a year
(Adds analyst comment, details from conference call)
By Sruthi Ramakrishnan
Feb 7 Michael Kors Holdings Ltd
forecast current-quarter profit below estimates, raising
concerns that the company's efforts to reinvigorate its brand
was taking much longer than expected, sending the handbag
maker's shares down 15 percent.
The company, which also sells apparel, watches and shoes,
reported a bigger-than-expected drop in comparable sales for the
holiday quarter - their sixth fall in the past seven quarters.
Kors, once the hottest name in the "affordable luxury"
sector, posted double-digit sales growth until 2014, helped by
the runaway success of its $300 bags.
In its bid to sustain sales growth, the company rapidly
expanded in North America, a move that made its handbags too
commonplace for fashion-conscious women.
To turn its business around, Kors is expanding into dresses
and menswear, investing in its online business, and reducing
supplies to department stores, which have been discounting
heavily to bring back shoppers.
"As much as we believe that Michael Kors is headed in the
right direction ... we maintain our view that it has much more
work to do in reconnecting with customers who have been
alienated by the overexpansion of the brand," said Neil
Saunders, managing director of research firm GlobalData Retail.
The company said on Tuesday it would cut back promotions in
North America, starting this month, to boost average retail
Michael Kors, however, said it expected weakness in North
America and Europe to continue, partly due to fewer shoppers
The company forecast fourth-quarter profit of 68 cents-72
cents per share on revenue of $1.04 billion-$1.06 billion.
Analysts were expecting earnings of 93 cents per share and
revenue of $1.11 billion, according to Thomson Reuters I/B/E/S.
The company's shares fell to $34.92 on Tuesday, making the
stock the biggest percentage loser on the New York Stock
Michael Kors said average selling prices in the third
quarter were hurt by a highly promotional environment as well as
the continued popularity of cheaper cross-body bags and small
leather goods in the third quarter.
Michael Kors' third-quarter profit of $1.64 per share beat
the average analyst estimate by 1 cent, according to Thomson
Quarterly revenue in the Americas region fell 7.4 percent,
while Europe sales were down 7 percent.
Sales at stores open for more than a year fell 6.9 percent
in the third quarter ended Dec. 31, reflecting a mid
single-digit decrease in North America and a midteens decline in
In contrast, bigger rival Coach Inc's North American
same-store stores sales rose 3 percent, their third consecutive
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by
Saumyadeb Chakrabarty and Sayantani Ghosh)