Michael Kors Holdings Ltd (NYSE:KORS) reported net income for the third quarter that dipped 3% from last year, hurt by a fall in gross and operating margins. However, its earnings per share swept past analyst expectations by thirteen cents a share. As a result, investors piled into the stock and it is up 23% on a day of heavy losses in the broader markets.

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Revenue Grows

Michael Kors recorded a 6.3% improvement in total revenue to $1.40 billion from $1.31 billion last year. On a constant currency basis, growth would have been 9.9%. Retail net sales grew 11.1% to $766.2 million fueled by e-commerce sales from its digital flagships, as well as 114 fresh store openings. However, comparable store sales witnessed a 0.9% fall.

The driving force behind the earnings beat was the US market which improved 40 basis points to $1.06 billion while revenue from the European segment advanced 14.3% to $276.0 million. On a constant currency basis, growth would have been 1.4% and 29.1% respectively in the United States and Europe. Japan witnessed 59.1% growth in revenue while it would have been 68% on a constant currency basis.

The company’s net income fell 3% to $294.6 million from $303.7 million last year. However, its earnings advanced 7.4% to $1.59 a share from $1.48 a share. The growth was due to a lower share count and came in despite suffering six cents a share of impact from currency swings. Street analysts estimated the company to report earnings of $1.46 a share for the third quarter and $1.36 billion revenue.

Margins Dip

Michael Kors’s gross profit as a percentage of total revenue fell to 59.5% from 60.9% last yea. The company blamed foreign currency impact for dragging it down 95 basis points. Similarly, income from operations was 29.3% as a percentage of revenue, down from 31.8%.

Michael Kors Chairman and CEO John Idol expressed confidence that its continued execution of tactical initiatives would deliver long-term growth.