KORS’ big win in fiscal 1Q18
New York-based Michael Kors Holdings Limited (KORS) reported its fiscal 1Q18 results on Tuesday, August 8, 2017. The results relate to the three-month period ending July 1, 2017.
KORS came in ahead of the Wall Street expectation for both top and bottom lines. Its EPS (earnings per share) stood at $0.90, or $0.28 higher than the estimate, while its revenue fell 3.6% YoY (year-over-year) to $952 million but still beat the consensus by $34 million. The company’s stock price surged a whopping 21.5% on these better-than-expected results and strong guidance.
About Michael Kors
Established in 1981, Michael Kors operates as a luxury fashion brand that designs and sells handbags, ready-to-wear apparel, and fashion accessories. The company markets under three primary brands: MICHAEL Michael Kors, Michael Kors Collection, and Michael Kors Men’s lines.
On July 1, 2017, KORS was operating 838 retail stores, including concessions, in more than 100 countries.
On July 25, the company announced the acquisition of Jimmy Choo (CHOO) for $1.2 billion. Jimmy Choo is a premier luxury footwear and accessories brand with strong presence in Europe, Asia, and North America. The transaction is expected to close by the third quarter of the current fiscal year.
Valuations update and stock recommendation
KORS is currently trading at a one-year forward PE (price-to-earnings) ratio of 12.3x, touching the upper end of its 52-week PE range, but it continues to trade at a discount to handbag rival Coach (COH), which is valued at 20.3x. Peers PVH Corporation (PVH) and Ralph Lauren (RL) are trading at 16x and 17.8x, respectively.
ETF investors seeking to add exposure to Kors can consider the Vanguard Growth ETF (VUG), which invests 2.9% of its portfolio in KORS.
Keep reading this five-part series (below) to know more about Kors’s 1Q18 performance, valuations, stock market performance, and recent analyst actions.