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Michael Kors Made Changes in Its Management

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Price movement of Michael Kors

Michael Kors Holdings (KORS) has a market cap of $9.0 billion. It rose by 0.93% to close at $49.88 per share on June 15, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.6%, 20.3%, and 24.5%, respectively, on the same day.

This means that Michael Kors Holdings is trading 9.9% above its 20-day moving average, 2.2% above its 50-day moving average, and 8.5% above its 200-day moving average.

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Related ETFs and peers

The Vanguard Mid-Cap Growth ETF (VOT) invests 0.25% of its holdings in Michael Kors. The ETF tracks a market-cap-weighted index of midcap growth companies selected by the Center for Research in Security Prices (CRSP). The YTD price movement of VOT was 1.5% on June 15, 2016.

The iShares MSCI USA Quality Factor ETF (QUAL) invests 0.19% of its holdings in Michael Kors. The ETF tracks an index of US large- and mid-cap stocks, selected and weighted by high ROE, stable earnings growth and low debt-to-equity, relative to peers in each sector.

The market caps of Michael Kors’s competitors are as follows:

  • Ralph Lauren Corporation (RL) — $7.9 billion
  • Coach (COH) — $10.9 billion

Michael Kors made internal promotions

Michael Kors has made the following promotions in its management:

  • The company promoted Philippa Newman to the president of accessories and footwear. Newman will report to Anna Bakst, group president of accessories and footwear. She has experience in sales and merchandising positions at Calvin Klein, Donna Karan, Alexander McQueen, and Tory Burch.
  • KORS promoted Michele Chan to the president of women’s ready-to-wear. Chan will report to Gia Castrogiovanni, group president of women’s ready-to-wear. She has experience in merchandising positions at Lord & Taylor and AnnTaylor.
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Performance of Michael Kors in 4Q16 and 2016

Michael Kors (KORS) reported fiscal 4Q16 total revenue of ~$1.2 billion, a rise of 10.9% compared to total revenue of ~$1.0 billion in fiscal 4Q15. Revenue from the Retail and Wholesale segments rose by 22.0% and 3.5%, respectively, and revenue from licensing fell by 13.6% in fiscal 4Q16 compared to fiscal 4Q15.

In fiscal 4Q16, its net income fell to $177.0 million and its EPS (earnings per share) rose to $0.98 compared to net income and EPS of $182.6 million and $0.90, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, KORS reported total revenue of ~$4.7 billion, a rise of 7.8% YoY (year-over-year). Its net income fell to $839.1 million, and its EPS rose to $4.44 in fiscal 2016 compared to net income and EPS of $881.0 million and $4.28, respectively, in fiscal 2015.

Michael Kors’s (KORS) cash and cash equivalents fell by 28.3%, and its inventories rose by 5.2% in fiscal 2016. Its current ratio fell to 3.8x, and its debt-to-equity ratio rose to 0.28x in fiscal 2016. This is compared to a current ratio and a debt-to-equity ratio of 6.1x and 0.20x, respectively, in fiscal 2015.

Projections

Michael Kors Holdings (KORS) has made the following projections for fiscal 1Q17 and fiscal 2017:

Fiscal 1Q17:

  • total revenue in the range of $940 million–$950 million, which includes a reduction in wholesale shipments and comparable sales to fall in the mid-single-digit range
  • non-GAAP operating expense as a percentage of total revenue to rise in the range of 6.9%–7.4%.
  • non-GAAP EPS in the range of $0.70–$0.74
  • GAAP EPS in the range of $0.62–$0.66
  • tax rate of ~21%

Fiscal 2017:

  • expected total revenue could be flat and comparable sales to fall in the low single-digit range.
  • non-GAAP operating margin of ~21.5%
  • non-GAAP EPS in the range of $4.56–$4.64
  • GAAP EPS in the range of $4.47–$4.55
  • tax rate of ~21%

In the final part of this series, we’ll take a look at Vista Outdoor.

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