After recording revenue growth of 43 percent in the first quarter of fiscal 2015, sales at Michael Kors held steady in the second quarter, which ended September 27, rising 42.7 percent relative to the year prior to reach $1.1 billion. Europe continues to be a massive growth driver for the company, with revenue in the region jumping 108.6 percent to $237.9 million. Japan's sales also increased 106 percent to $16.5 million.
Growth in North America, Kors's largest and most developed market, was solid but more modest. The region brought in $802.2 million, a 29.8 percent boost, with comparable store sales growing 11 percent. CEO John Idol noted that retail growth will likely level out in the high single digits or very low double digits, there are still opportunities to expand the brand's wholesale presence, shop-in-shops, and jewelry and shoe businesses.
"I know there's concern about North American comp store [sales], but we're reaching levels that are more sustainable," Idol said. "North America has plenty of growth left for us."
The Kors team is also sitting tight through the holiday season in the U.S. — which, yes, is officially upon us. Idol expressed his concerns about mall traffic in the next few months, noting that consumers already appear to be "slightly more conservative" with their spending this year. ("I don't think that's only in our case," he added.)
But while other retailers will be fighting to win shoppers' dollars this season by offering better deals, Idol says Michael Kors isn't taking a promotional posture. Essentially, the company isn't willing to devalue its status as a luxury brand for the short-term benefit of stronger holiday sales.
To further drive home its identity as a luxe label, Michael Kors has relocated its principal offices from Hong Kong to London, under what execs expressed is the belief that Europe is the "center of luxury brands." Increasingly, it seems that Kors is aligning itself with the Hermès and LVMHs of the world.