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Press release from Business Wire

Michael Kors Holdings Limited Announces First Quarter Fiscal 2013 Results

<p class='bwalignc'> <b>Total Revenue Increased 71%; Comparable Store Sales Increased 37.3%</b> </p> <p class='bwalignc'> <b>Diluted EPS Increased 162% to $0.34</b> </p>

Tuesday, August 14, 2012

Michael Kors Holdings Limited Announces First Quarter Fiscal 2013 Results07:00 EDT Tuesday, August 14, 2012 HONG KONG (Business Wire) -- Michael Kors Holdings Limited (NYSE:KORS) (the “Company”), a global luxury lifestyle brand with a multi-channel strategy, unique design and strong infrastructure, today announced its financial results for the first quarter ended June 30, 2012. John Idol, the Company's Chairman and Chief Executive Officer, said, “We are pleased with the strong start to our fiscal year with a 71% increase in total revenue and 185% growth in net income. Our results demonstrate the strong momentum of the Michael Kors brand and the continued execution of our key growth strategies. Michael Kors' luxury fashion designs are resonating globally with our customers.” For the first quarter ended June 30, 2012: Total revenue increased 71% to $414.9 million from $243.1 million in the first quarter of fiscal 2012. Retail net sales increased 76% to $215.0 million driven by a 37.3% increase in comparable store sales and 76 new store openings since the end of the first quarter last year. Wholesale net sales increased 66% to $182.4 million and licensing revenue increased 61% to $17.5 million. Gross profit increased 83% to $251.0 million, and as a percentage of total revenue increased to 60.5% compared to 56.3% in the first quarter of fiscal 2012. Income from operations increased 149% to $111.9 million, and as a percentage of total revenue was 27.0%. This compares to income from operations for the first quarter of fiscal 2012 of $45.0 million, or 18.5% as a percentage of total revenue. Net income was $68.6 million, or $0.34 per diluted share, based on 199.4 million weighted average diluted shares outstanding. Net income for the first quarter of fiscal 2012 was $24.1 million, or $0.13 per diluted share, based on 179.2 million weighted average diluted shares outstanding. At June 30, 2012, the Company operated 253 retail stores, including concessions, compared to 177 retail stores, including concessions, at the end of the same prior-year period. The Company had 68 additional retail stores, including concessions, operated through licensing partners. Including these, there were 321 Michael Kors stores worldwide at the end of the second quarter. Mr. Idol continued, “During the first quarter we saw continued strength in each of our retail, wholesale and licensing segments and across geographies. In North America, our comparable store sales rose 38.4% reflecting the strong appeal of the Michael Kors brand, our consistent delivery of a compelling assortment of luxury products, and our exciting jet-set in-store experience. The 66% growth in our wholesale segment is the result of the continued conversions to shop-in-shops in department stores. Our strong revenue growth in Europe demonstrates the growing momentum of the Michael Kors brand which led to a 24.2% increase in comparable store sales and strong performance in our wholesale operations. The 61% growth in our licensing revenue was led by strong sales in the Michael Kors watch line. Overall, we are extremely excited about the long term growth potential of our Company as we continue to build upon the success we achieved in establishing Michael Kors as a global luxury lifestyle brand.” Outlook For the second quarter of fiscal 2013, the Company expects total revenue to be in the range of $490 million to $500 million. This assumes a comparable store sales increase of approximately 30%. Diluted earnings per share are expected to be in the range of $0.33 to $0.35 for the quarter. This assumes 201.0 million diluted weighted average shares outstanding and a 38% tax rate. For fiscal 2013, the Company now expects total revenue to be in the range of $1.8 billion to $1.9 billion. This assumes a comparable store sales increase in the mid- to high-twenty percent range. Diluted earnings per share are expected to be in the range of $1.32 to $1.34 for the year. This assumes 201.2 million diluted weighted average shares outstanding and a 38% tax rate. Conference Call Information A conference call to discuss first quarter results is scheduled for today, August 14, 2012 at 8:00 a.m. EDT. A replay of the call will be available today at 11:00 a.m. EDT; to access the replay, dial 1-877-870-5176 for domestic callers or dial 1-858-384-5517 for international callers and enter access code 1463201. The conference call will also be webcast live in the investor relations section of www.michaelkors.com. The webcast will be accessible on the website for approximately 90 days after the call. About Michael Kors Michael Kors is a world-renowned, award-winning designer of luxury accessories and ready to wear. His namesake company, established in 1981, currently produces a range of products through his Michael Kors, KORS Michael Kors and MICHAEL Michael Kors labels, including accessories, footwear, watches, jewelry, men's and women's ready to wear, and a full line of fragrance products. Michael Kors stores are operated, either directly or through licensing partners, in some of the most prestigious cities in the world, including New York, Beverly Hills, Chicago, London, Milan, Paris, Munich, Istanbul, Dubai, Seoul, Tokyo and Hong Kong. Forward Looking StatementsThis press release contains forward-looking statements. You should not place undue reliance on such statements because they are subject to numerous uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements include information concerning the Company's possible or assumed future results of operations, including descriptions of its business strategy. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “seek,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. The forward-looking statements contained in this press release are based on assumptions that the Company has made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors that it believes are appropriate under the circumstances. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual financial results or results of operations and could cause actual results to differ materially from those in these forward-looking statements. These factors are more fully discussed in the “Risk Factors” section and elsewhere in the Company's Annual Report on Form 20-F for the fiscal year ended March 31, 2012 (File No. 001-35368), filed on June 12, 2012 with the U.S. Securities and Exchange Commission.         SCHEDULE 1   MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(In thousands, except share and per share data)(Unaudited)   Three Months Ended June 30, July 2, 2012 2011   Net sales $ 397,370 $ 232,282 Licensing revenue   17,495     10,844 Total revenue 414,865 243,126 Cost of goods sold   163,865     106,157 Gross profit 251,000 136,969 Total operating expenses   139,057     91,993 Income from operations 111,943 44,976 Interest expense, net 435 671 Foreign currency (gain) loss   (375 )   1,507 Income before provision for income taxes 111,883 42,798 Provision for income taxes   43,238     18,683 Net income 68,645 24,115 Net income applicable to preference shareholders   -     5,198 Net income available for ordinary shareholders $ 68,645   $ 18,917   Weighted average ordinary shares outstanding: Basic 192,790,454 140,554,377 Diluted 199,391,127 179,177,268   Net income per ordinary share (1): Basic $ 0.36 $ 0.13 Diluted $ 0.34 $ 0.13   Statements of Comprehensive Income: Net income $ 68,645 $ 24,115 Foreign currency translation adjustments   (3,278 )   1,979 Comprehensive income $ 65,367   $ 26,094   (1)   The calculation for basic earnings per ordinary share is based on net income available for ordinary shareholders divided by basic ordinary shares. The calculation for diluted earnings per share is based on net income divided by diluted shares.           SCHEDULE 2   MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share data)(Unaudited)   June 30, March 31, July 2, Assets 2012 2012 2011 Current assets Cash and cash equivalents $ 162,075 $ 106,354 $ 58,198 Receivables, net 104,700 127,226 47,986 Inventories 246,601 187,413 122,015 Deferred tax assets 15,518 11,145 7,925 Prepaid expenses and other current assets   40,298     31,925     20,129 Total current assets 569,192 464,063 256,253 Property and equipment, net 180,317 170,755 120,731 Intangible assets, net 13,684 14,146 15,449 Goodwill 14,005 14,005 14,005 Deferred tax assets 3,942 3,952 1,357 Other assets   6,780     7,504     3,827 Total assets $ 787,920   $ 674,425   $ 411,622   Liabilities and Shareholders' Equity Current liabilities Revolving line of credit $ 27,667 $ 22,674 $ 13,238 Accounts payable 82,464 67,326 50,989 Accrued payroll and payroll related expenses 17,270 33,710 9,615 Accrued income taxes 40,342 8,199 16,646 Accrued expenses and other current liabilities   28,505     33,097     20,653 Total current liabilities 196,248 165,006 111,141 Note payable to parent - - 101,650 Deferred rent 46,137 43,292 31,999 Deferred tax liabilities 6,816 6,300 5,495 Other long-term liabilities   3,069     3,590     3,218 Total liabilities 252,270 218,188 253,503 Commitments and contingencies Contingently redeemable ordinary shares - - 6,706 Shareholders' equity * Ordinary shares, no par value; 650,000,000 shares authorized, and 193,226,091 shares issued and outstanding at June 30, 2012, and 192,731,390 shares issued and outstanding at March 31, 2012. - - - Additional paid-in capital 242,367 228,321 39,999 Accumulated other comprehensive loss (4,013 ) (735 ) 6,012 Retained earnings   297,296     228,651     105,402 Total shareholders' equity   535,650     456,237     151,413 Total liabilities and shareholders' equity $ 787,920   $ 674,425   $ 411,622   * Share amounts applicable to July 2, 2011 were omitted as they reflect our equity structure prior to our restructuring and initial public offering.         SCHEDULE 3   MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIESCONSOLIDATED SEGMENT DATA(In thousands)(Unaudited)   Three Months Ended June 30, July 2, 2012 2011 Revenue by Region: North America (U.S. and Canada) $ 377,149 $ 225,768 Europe 33,387 15,864 Other Regions   4,329   1,494 Total Revenue: $ 414,865 $ 243,126   Revenue by Segment: Net sales: Retail $ 215,004 $ 122,344 Wholesale 182,366 109,938 Licensing   17,495   10,844 Total Revenue: $ 414,865 $ 243,126   Income from Operations: Retail $ 59,879 $ 27,922 Wholesale 40,718 10,868 Licensing   11,346   6,186 Total Income from Operations $ 111,943 $ 44,976 Investor Relations:ICR, Inc.Jean Fontana, 203-682-8200jean.fontana@icrinc.comorMedia:Michael Kors Holdings LimitedLisa Pomerantz, 212-201-8128lisa.pomerantz@michaelkors.com