Fossil (FOSL) and Michael Kors (KORS) reported earnings yesterday, and delicious results from both luxury leaders at least helped to justify the outsized gains KORS stock and FOSL stock already have in the books for 2013.
Including the 6% jump for KORS stock yesterday after earnings, Michael Kors stock is up 55% year-to-date.
FOSL, on the other hand, gained 3% heading into the report but opened slightly lower today. Nonetheless, Fossil stock remains near all-time highs and has climbed 44% so far this year.
Unfortunately, it’s not all good news out of Michael Kors and Fossil earnings. Both luxury stocks did fall a bit short on their holiday outlooks.
Let’s take a closer look at what came out of recent reports for FOSL and KORS.
Fossil Earnings (FOSL)
Fossil earnings for Q3 tallied $1.58 per share vs. expectations of just $1.36, representing growth of 25% year-over-year for FOSL. That also tallies the third straight quarter that Fossil earnings blew away expectations.
Net sales grew in all business segments and all major product categories for FOSL, with 18% growth overall. The details:
- FOSL North America increased 18% year-over-year (although that included the benefit of about $16 million in sales that were expected in the fourth quarter of fiscal 2013 and a benefit from the $17 million delay in holiday orders into the fourth quarter of fiscal 2012) and made up just under 40% of sales.
- The Fossil earnings report also showed that sales in Europe (about a quarter of total sales) increased 23% year-over-year.
- The Asia Pacific region increased 13% for FOSL, and made up around 13% of the total.
- Meanwhile, the remaining 25% of sales for FOSL were direct to consumer, and that segment increased 16%.
One red flag in the third-quarter Fossil earnings to note: Global retail same-store sales fell 0.5% thanks to weakness in North America.
Michael Kors Earnings (KORS)
Meanwhile, same-store sales were anything but weak in the second-quarter Michael Kors earnings report. KORS comps improved 23% year-over-year.
Michael Kors earnings overall also grew 45% year-over-year on total sales growth of 39%. That translated to earnings of 71 cents per share of KORS stock vs. expectations for 68 cents per share.
One big difference to note in the mix of Fossil and Michael Kors earnings: KORS is much less global, with around 85% of KORS sales coming in North America and the rest from Europe. That’s not necessarily bad news if you’re a KORS stock fan, because it could simply be seen as more room for Michael Kors to expand.
What is bad news, though, is the fact that Michael Kors — along with Fossil — fell short of the Street’s expectations for their current-quarter outlooks.
Fossil earnings for the fourth quarter are expected to tally between $2.26 to $2.46 per FOSL share — far below the consensus for $2.59 per share. That’s because the aforementioned benefits that helped bolster Q3 Fossil earnings are going to hurt the company in Q4.
The good news, at least, is that Fossil earnings for the full year still are in line thanks to the strong Q3. Wall Street had slated $6.30 per shares, while FOSL listed a range of $6.15 to $6.35 per share.
The same is true for Michael Kors earnings. They are expected to total 83 to 85 cents per share in the all-important holiday quarter — just below the 86-cent consensus — but the full-year range still was on track.
The question now is whether KORS stock and FOSL stock can keep climbing for the rest of 2014. Both retailers have outsized gains in the books, but both hardly posted outsized expectations for the important holiday shopping season.
The subpar outlooks could be a blessing in disguise, since it means a low bar to hop over … or it could be a sign that the biggest gains have already passed.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.