Shares of Michael Kors soared after the clothing and apparel company's same store sales fell much less than analysts had feared. Fred Katayama reports.
Investors liking what they see in Michael Kors' latest quarter. Sales at established stores fell nearly 6 percent, but they slipped a lot less than analysts expected. Driving those results: sales in North America and Europe were stronger than anticipated. What's more, the apparel and accessories company raised its annual revenue forecast. And Kors said its purchase last month of London's luxury shoe maker known for its stilettos, Jimmy Choo, will add about $275 million in revenue in the second half of its fiscal year. Kors shares, down 13 percent this year, rebounded sharply at the start of trading Tuesday. Consumer Edge Research senior analyst David Schick said, "We are encouraged by the sequential comp improvement, and our store visits to London flagship has suggested more 'street cred' at the high end." Profit dropped and revenue dipped, but both crushed Wall Street's estimates. Kors has seen its market value shrivel due to fierce competition and a drop in customers at department stores. Demand for its bags has fallen because the company's fast expansion made the brand too ubiquitous.