Revenue rose sharply at the handbag maker, Michael Kors, spurred by online sales and the addition of new stores. Fred Katayama reports.
Handbag makers are starting to come back. One week after Coach wowed investors with its quarterly results, so too did Michael Kors. Strong online sales in North America and the addition of 116 new stores drove Kors' retail sales sharply higher, and sales to department stores rose at an even faster clip. The affordable luxury brand's same-store sales fell by less than expected. The strong dollar hurt profit, but it blew past analysts forecasts. Kors said it would buy back more stock. Shares of the one-time stock market darling have plummeted by nearly half this year amid a slowdown in handbag and watch sales and the dollar's rise. They bounced higher on the earnings report, but they have vastly underperformed those of Coach and Kate Spade this year. The company says new products and its marketing campaign make it - in its words - "well positioned" - for the holiday sales season. But recovery isn't in the bag just yet. Cowen analyst Oliver Chen said, "We remain cautious as management revised fiscal year 2016 guidance down, also guiding lower third quarter earnings per share." The culprit behind those lowered forecasts: the strong currency.