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Fiscal 2Q18: Another Slow Quarter Expected from Michael Kors

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Fiscal 2Q18: Another Slow Quarter Expected from Michael Kors PART 1 OF 5

Michael Kors’ Top and Bottom Lines to Slide in Fiscal 2Q18

Series snapshot

New York–based Michael Kors Holdings Limited (KORS) is slated to report its fiscal 2Q18 (quarter ended September 2017) results on Monday, November 6, 2017. Wall Street analysts expect its earnings per share are predicted to decline 12.6% YoY (year-over-year) to $0.83 per share during the quarter. 

Total sales could contract 4.1% YoY to ~$1.0 billion. This would be the fifth consecutive quarterly decline in KORS’ top line.

Michael Kors’ Top and Bottom Lines to Slide in Fiscal 2Q18

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Valuations update

KORS is currently trading at a one-year forward price-to-earnings (or PE) ratio of 12.9x versus a three-year average of 11.2x. It is trading at the upper end of its 52-week PE range of 8.8x–13.4x.

Competitor Tapestry (TPR), formerly known as Coach (COH), trades at a premium to KORS. The company is valued at 17x the next 12 months’ earnings.

KORS is also cheaper compared to apparel and accessories stocks like PVH Corp. (PVH), VF Corporation (VFC), and Ralph Lauren (RL), which are currently trading at 15.3x, 21.3x, and 16.6x, respectively.

About Michael Kors

Established in 1981, Michael Kors is a luxury fashion brand that designs and sells handbags, ready-to-wear apparel, and fashion accessories. The company operates close to 840 retail stores, including concessions in more than 100 countries.

In July 2017, the company announced the acquisition of Jimmy Choo (CHOO) for $1.2 billion. Jimmy Choo is a premier luxury footwear and accessories brand that has a strong presence in Europe, Asia, and North America.

ETF investors seeking to add exposure to Michael Kors can consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 1.9% of its portfolio in the company.

Series preview

In this series, we’ll provide a preview of Michael Kors’ (KOR) fiscal 2Q18 results. We’ll discuss the company’s expected performance in the coming quarter. We’ll talk about its stock market performance, valuations, and recent analyst actions.

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