Handbags, watches fashion Michael Kors upbeat forecast

posted on 12 Mar 2013 13:28 by michaelkors2013xo
(Reuters) - Fashion company info Michael Kors Holdings Ltd (KORS.N) raised its full-year forecast after strong sales of its luxury items such as handbags and watches over the holiday period helped to win market share from rival Coach Inc (COH.N), sending its shares to a record high. Shares of the company, named after its New York-born founder, rose as much as 13 percent to $64.80 on the New York Stock Exchange on Tuesday. The stock has more than tripled since Michael Kors went public in December 2011. "Michael Kors is bringing more excitement to the category where people are buying new handbags, instead of other items like clothing," Citi analyst Oliver Chen told Reuters. Designer Michael Kors launched his brand 30 years ago as a luxury sportswear house. The company now makes pyramid-studded Saffiano leather handbags, watches and apparel worn by first lady Michelle Obama and celebrities including Jennifer Lopez. Michael Kors raised $944 million in its initial public offering just over a year ago, one of the biggest ever listings by a U.S. fashion company. The company now has a market capitalization of $12.6 billion. Kors, well-known for his work as a judge on the long-running television fashion show "Project Runway", held a 3.7 percent stake in the company as of December 31. At today's share price, this stake would be worth around $466 million. The company, which reported third-quarter results that comfortably beat Wall Street estimates, said the addition of new stores and the conversion of department store premises into branded "shop-in-shops" had drawn in more customers. A shop-in-shop is a mini-store within a larger department store that houses similar products. In total, there were 388 Michael Kors stores worldwide at the end of the third quarter, the company said. "It's the big opportunity for Michael Kors, growing stores, as that means a lot of runway for them to grow for at least two or three more years," said Chen
Michael Kors bags
. Comparable-store sales rose 41 percent in North America in the October-December holiday quarter, while larger rival Coach said last month same-store sales fell 2 percent in North America, only its third decrease in 11 years. "They (Michael Kors) are gaining market share from Coach, but it's not only Coach - it's also the little guys that are getting squeezed in a highly competitive market," Morningstar analyst Paul Swinand said. POPULAR ACCESSORIES Chen, the Citi analyst, said that Michael Kors' popularity as a brand allowed the company to be more flexible in pricing than its rivals. He said its focus on smaller handbags and accessories also presented a particular challenge to Coach. Michael Kors Chief Executive John Idol said there was strong demand for luxury items in the third quarter from Europe and North America. He said he expected the global luxury market to keep growing at the same pace, without specifying a timeframe. The Luxury Goods Worldwide Market Study of 2012 estimated that the global luxury goods market would grow to between $314 billion and $327 billion in 2015 from $251 billion in 2011. The lure of a new brand in the market has also driven growth for Michael Kors in the relatively weak European market. Comparable-store sales in Europe rose 58 percent in the third quarter, the company said. "Their fashion angle is quite attractive and I feel Europeans respond to the fashion credibility that Michael Kors has," Chen said. Chief Executive Idol said he expected Europe to be a $500 million market in which the company would open 100 stores. Kors raised its full-year earnings-per-share estimate to a range of $1.80 to $1.82 from its previous range of $1.48 to $1.50. It also raised its full-year revenue forecast to about $2.1 billion from a range of $1.86 billion to $1 .96 billion. Analysts had estimated full-year earnings of $1.57 per share on revenue of $2.01 billion, according to Thomson Reuters I/B/E/S. The largest shareholder in Michael Kors, with a stake of about 16 percent, is Hong Kong-based Sportswear Holdings Ltd, led by Silas Chou and Lawrence Stroll, who have had a hand in developing fashion brands including Tommy Hilfiger and Pepe Jeans. Michael Kors said it expected a low- to mid-20s percentage increase in same-store sales in the current quarter. Net income rose fourfold to $130.0 million, or 64 cents per share, from $32.0 million, or 20 cents per share, a year earlier. Analysts had expected 41 cents per share. Revenue jumped 70 percent to $636.8 million in the quarter ended December, compared with $540.3 million forecast by analysts. "I think its sales trends will continue," said Swinand of Morningstar. "It is going to have momentum as newer people are more excited about it." (Reporting By Siddharth Cavale in Bangalore and Martinne Geller in New York; Editing Michael Kors Outlet by Lisa Von Ahn, Robin Paxton and Sreejiraj Eluvangal)

For Michael Kors Insiders, Cashing Out Is Very Much in Fashion

posted on 12 Mar 2013 13:27 by michaelkors2013xo
It took more than three decades for the clothing designer Michael Kors to reach the pinnacle Michael Kors Outlet of the fashion world. But it has taken just 14 months for him to become enormously rich. Since the initial public offering of Michael Kors Holdings in December 2011, Mr. Kors has sold about $700 million worth of the company’s stock. His latest sale, of about three million shares, or $180 million, came on Thursday as part of a large offering by Michael Kors insiders. Even with all the sales, Mr. Kors retains a 2.5 percent stake, worth about $300 million — not bad for a Fashion Institute of Technology dropout. The aggressive selling by Mr. Kors and his colleagues added to the large volume of share sales by public company executives in recent weeks. As the major stock market indexes trade near their five-year high, corporate insiders are taking advantage of the rally to profit from their holdings. In the last week alone, executives at 153 companies in the Standard & Poor’s 500 stock market index sold shares, with sales outnumbering purchases by 17 to 1, according to research compiled by Pavilion Financial, a Montreal brokerage firm, and Bloomberg. Prominent sales included those by Larry Page, chief executive of Google, who sold about $65 million worth of stock, and Rupert Murdoch, who offloaded about $40 million of News Corporation stock. “Insiders are not buying the current rally,” Pierre Lapointe, the research chief at Pavilion, wrote in a note to clients. “The recent gains have given them reason to sell their own stock. History tells us that high insider selling is usually followed by disappointing S.&.P. 500 returns in the following months.” There has been nothing disappointing about the performance of Michael Kors stock. The company’s shares have tripled since the I.P.O. Mr. Kors, 53, and his fellow insiders have taken advantage of the steep rise, selling big blocks of stock three times, with each sale at a higher price than the previous one. Yet the recent stock sales by the Michael Kors executive team came the week after the company reported excellent earnings and the promise of continued growth. “Another stellar quarter Michael, you’re the man!” exclaimed a report by Randal Konik, an analyst for Jefferies, who raised his price target on the company’s stock to $80 a share. Brian J. Tunick, a JPMorgan analyst, increased his estimates, noting “the company’s strong brand momentum and seasoned management team are extremely well positioned to continue gaining market share in the global accessories market.” He contrasted Michael Kors’s strong numbers with the weak financial results posted by its rival, Coach, underscoring Michael Kors’s dominance in the “affordable luxury” category. The company’s management also delivered a rosy outlook. “We believe that the Michael Kors brand is ideally positioned within the global luxury lifestyle market, and we look forward to delivering on our long-term objectives,” said John D. Idol, the company’s chairman and chief executive. Despite the positive view, Mr. Idol, who has run the company since 2003, has also been a big seller of his stock holdings. After a sale on Thursday of about two million shares, Mr. Idol, a longtime fashion executive who previously served in senior posts at Ralph Lauren and Donna Karan, has unloaded more than $400 million in shares owned by him and his family since the I.P.O. He retains about a 1 percent stake in the company. A spokeswoman for Michael Kors Holdings declined to comment on the stock sales, citing a mandatory “quiet period” surrounding the transactions. But the money raised by Mr. Kors and Mr. Idol looks modest compared with the stock sales made by Michael Kors’s private equity investors, Lawrence S. Stroll and Silas K..F. Chou. Mr. Stroll, a Canadian, and Mr. Chou, a Hong Kong resident, are fashion-industry tycoons who run Sportswear Holdings Limited, which acquired the Michael Kors company in 2003 for about $100 million. With Kors, the two have replicated the success that they had 20 years ago, when they backed another up-and-coming fashion designer, Tommy Hilfiger. Heading into the I.P.O info., Mr
Michael Kors bags
. Stroll and Mr. Chou controlled slightly more than half of the Michael Kors company. On Thursday, they sold about two-thirds of their remaining stake, and now own about 6 percent. They have sold roughly $3 billion worth of shares over the last 14 months. The aggressive cash-outs by Mr. Kors and the others have been part of the case against buying Michael Kors stock. But anyone who has resisted buying its shares has rued that decision. Yet with this latest round of sales, investors appear concerned. The company’s shares, which peaked at $65 a share on Tuesday, have dropped nearly 10 percent since the company announced its latest stock sale. They closed on Thursday at $59 share, down about 4 percent for the day. Not every Wall Street analyst believes that insider selling is a reliable indicator of a company’s future performance, or of the market’s. Laszlo Birinyi, president of the research firm Birinyi Associates, thinks that investors should not glean anything from insider sales, because they are driven by individuals’ decisions about their personal holdings and not necessarily reflective of any broader trend. “Given what Michael Kors stock has done,” Mr. Birinyi said, “I’d be selling, too!”

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posted on 11 Mar 2013 13:27 by michaelkors2013xo

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