Michael Kors shares soar 22pc after revenues beat expectations

Michael Kors handbags in a store in Paris.

Michael Kors (NYSE:KORS) beat revenue expectations after a strong quarter of sales, sending shares soaring 22 percent. 

Beating an eight-quarter slump in same-store sales, Michael Kors has cut down on promotions and sold more premium handbags.

“We are encouraged by our first quarter performance, although we continue to believe that fiscal 2018 will be a transition year for our company, as we focus on laying the foundation for the future by executing on our strategic plan,” said CEO John Idol in a statement.

The revenue for the first quarter totalled $952.4 million, which was over analysts’ estimates for sales of $918.6 million.

Last month, the designer brand announced the $1.2 billion deal to buy Jimmy Choo.

“This will not be [Michael Kors’] last acquisition,” CEO Idol told CNBC after the acquisition was announced.

Kors is also adding more men’s clothing and dresses to its stores. They have also taken stores out of discount department stores such as Macy’s Inc as an attempt to increase average selling price per unit.

Neil Saunders, GlobalData Retail Managing Director, said: “The numbers are something of a step forward,”

“While the numbers may strengthen [from here], the rest of this fiscal year will essentially be one of rebuilding and refining the brand, as well as closing further excess capacity and investing in channels and stores that have the best forward potential.”

Jefferies analyst Randal Konik wrote in a note: “This trend of beating expectations is likely to continue as the top line appears on a path of improvement from here,”

“Management guided to both better top and bottom-line metrics for next quarter and the fiscal year, which is key as the market has been afraid of more guidance cuts. That’s simply not happening.”

Shares for the luxury brand were up by 21.7 percent at $45.30 at 1800 GMT, their highest since December 2016.