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(Bloomberg) -- Michael Kors Holdings Ltd.’s strategy to get shoppers to pay more for its luxury apparel and handbags is showing some signs of success.
Excluding some items, profit was 80 cents a share last quarter, the company said Tuesday. That topped analysts’ average 62-cent projection. The results drove the stock up as much as 14 percent in early trading.
The fashion house has been refreshing designs and sprucing up stores to entice customers to pay full price for products, while reducing department store markdowns, which have eroded its brand cachet. Last month, Michael Kors agreed to buy shoemaker Jimmy Choo Plc for $1.2 billion to add luster to the brand, and Chief Executive Officer John Idol said he’s planning for more acquisitions to boost growth.
The strategy is akin to that of rival Coach Inc., which bought shoe brand Stuart Weitzman in 2015 and handbag maker Kate Spade & Co. in May. Michael Kors is shuttering as many as 125 retail locations in the next two years as part of its Runway 2020 turnaround plan.
While same-store sales -- a closely watched measure -- fell 5.9 percent, that was far less than the average 8.9 percent estimate of analysts, according to Consensus Metrix. Idol said the company saw better-than-expected results in both North America and Europe.
Shares of the London-based company climbed as high as $42.49 in premarket trading. The stock had declined 13 percent this year through Monday’s close.
Michael Kors also raised its forecast for full-year earnings to $3.62 to 3.72 a share. In May, it said it expected profit of $3.57 to $3.67.
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