Michael Kors Holdings Inc.
Monday’s trading range: $52.30 to $53.88.
52-week trading range: $26.75 (U.S.) to $58.62 a share
Annual dividend: None
Analysts’ ratings: There were 13 buys, 1 hold and 1 sell, according to Bloomberg data. Targets range from $55 to $75 a share.
Recent history: The stock of the U.S.-listed luxury lifestyle retailer has been on a tear since it went public in December 2011 at $20 a share. Michael Kors shares have gained nearly 100 per cent over the past year as the company’s earnings beat analysts’ expectations and management raised guidance. The Hong Kong-based firm, which is named after its fashion-designer founder and is mainly focused on the North American market, has been transitioning from upscale apparel retailer to a lifestyle brand. It has been aggressively encroaching on Coach Inc.’s turf by branching into higher-margin “accessible luxury” accessories like woman’s handbags and jewellery.
Outlook: Michael Kors’ shares, which struggled in the fourth quarter amid “fiscal cliff” concerns, could have a “nice immediate move” on Tuesday if U.S. retail sales are higher than expected, said Stephen Rogers, a portfolio manager with Horizons Investment Management Inc. “Even though it is an industry number, Michael Kors is a high-growth stock, and fairly sensitive to perceptions.”
The company’s stock will react to both positive and negative surprises, he cautioned. In October, however, the stock gained about 7.2 per cent over two days after the September retail sales came in better than expected.
The Bloomberg consensus expectation for December retail sales is a surprisingly lacklustre 0.2 per cent given that the month should be strong because of Christmas shopping. “I think it is a bit deceptive,” said Mr. Rogers, who acquired shares of Michael Kors in the fourth quarter. “There is a wide range of estimates behind that consensus - from negative 0.3 per cent to positive 0.8 per cent...It could be materially higher or lower, but I think it is going to be higher because we’ve had some signs from other related numbers, including the Jan. 3rd U.S. chain store sales, that were surprisingly strong.”
The company’s third-quarter results to be released on Feb. 12 could be another short-term catalyst for the stock as well as international expansion over the longer term. Because the company has been fairly consistent in beating analysts’ expectations and raising guidance over recent quarters, “I really wouldn’t be surprised to see them do it again,” said Mr. Rogers, who suggests that Michael Kors stock could hit $65 to $75 a share over the next 12 months. “There is huge potential for overseas expansion,” he added. “China [where it has a handful of stores] is a big opportunity for them because of the seemingly endless appetite for western goods.”
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