Kors Beats Earnings, Raises Guidance

| About: Michael Kors (KORS)

Michael Kors (NYSE:KORS) announced earnings on the morning of Tuesday, August 6th, 2013, and unambiguously beat analyst expectations. Kors announced revenue clocking in at $640 million, up a respectable 55% from the year-ago quarter, with earnings per share of 61 cents, up huge over last year's quarter of 34 cents. Analysts expected EPS of 49 cents, with revenue of $570 million. Kors' quarter led analysts like Goldman to raise share price targets (Goldman raised its to $100/share).

Recognizing the importance of future growth, we like to examine the guidance going forward. Kors announced it was raising its fiscal year outlook to $2.67-2.69 EPS, up from a previous $2.43-$2.47, representing an 8% increase. It also lifted its revenue expectations to $2.8-2.9 billion, up from $2.65-$2.75 billion.

Retail companies also tend to offer a useful statistic on measuring growth at established stores, what the industry refers to as "same-store sales." It seeks to gauge how existing stores can garner more traffic and sales over time.

Kors' same-store sales were up a healthy 27% percent from the year-ago quarter. When broken down between the US and European market, we see an interesting statistic as well: European same-store sales are up a whopping 56%. In light of the difficult economic situation of the European consumer, this performance and growth should be recognized as great marketing and execution. If Europe continues to improve economically, it can offer Kors even more growth as more and more consumers get money in their pockets.

Our thesis on Kors will remain the same: it is a growing retail company that continues to attract a larger audience in more markets both in the US and around the world. With 75 net new stores from this time last year, Kors has demonstrated it can execute on making the strategic decisions on its growth. Considering its strong same-store sales growth to go hand-in-hand with its global expansion, the stock has been rewarded this year and we expect it to continue its healthy rise going into the back-to-school and holiday seasons.

Disclosure: I am long KORS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.