Bloomberg News

Michael Kors Rises as Status Symbols Push Profit Past Estimates

February 14, 2012

Feb. 14 (Bloomberg) -- Michael Kors Holdings Ltd., the luxury-goods maker and retailer founded by the eponymous designer, had the biggest gain since its stock-market debut after accessories sales drove earnings to more than double analysts’ estimates.

Kors had earnings excluding some items of 28 cents a share for the third quarter ended Dec. 31, according to a statement today. That topped the 11-cent average estimate of analysts surveyed by Bloomberg. Sales at stores open a year or more climbed 38 percent from a year earlier.

“These guys have the best momentum we’ve seen in all of retail, and they show no signs of slowing,” said Paul Lejuez, an analyst for Nomura Securities in New York.

Lejuez, who recommends buying Kors shares, said the company’s collections of small, luxury accessories, such as handbags and watches, put the brand in a “sweet spot.” The products “have really started hitting people’s radar screens as a go-to accessible luxury brand,” he said in a telephone interview.

Kors rose 27 percent to $42.76 at the close in New York, the biggest jump since the initial public offering in December at $20 a share.

Fiscal third-quarter sales rose 70 percent to $354 million, according to the company’s statement, and total revenue, including royalties, advanced 68 percent. Net income climbed 40 percent to $39 million, or 20 cents a share.

The company’s watches, which sell for $120 to $525 at department stores such as Macy’s, have “become a status symbol for a certain demographic,” said Corinna Freedman, an analyst with Wedbush Morgan Securities in New York, in a telephone interview.

The analyst said that “for a luxury brand, they’re surprisingly affordable.” Freedman rates the stock “outperform.”

--Editors: Jeffrey Tannenbaum, Romaine Bostick

KORS US

#<225440.2951704.2.1.99.7.25># -0- Feb/14/2012 21:04 GMT

To contact the reporter on this story: Alexander Yablon in New York at ayablon@bloomberg.net

To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus