Ever since Michael Kors (KORS, Financial) went public back in 2011, the investors have reaped huge benefits, and the stocks gained around 300% in just 3 years. The company has been expanding its global footprints at an exponential rate and has over 1,600 stores globally in just 3 years. Investors can always consider investing in Kors for growth in long run.
Growth-oriented quarter
Michael Kors reported a strong third quarter for the fiscal 2014. The revenue increased by 29.9% year over year, to record $1.3 billion, as compared to $1.0 billion in the same quarter last year. Growth of sales was leveraged by 114 new stores that were opened in the quarter, and the ecommerce site that was launched in U.S. Comparable stores sales also gained by 8.6% year over year. On a regional basis, the company recorded growth in all regions, namely Europe, Japan and North America.
Regional Revenue and Comparable stores growth (Constant currency basis)
| Ă‚ | Region | Revenue Growth | Comparable Store Sale |
| 1 | North America | 23.1% | 6.8% |
| 2 | Japan | 96.3% | 54.4% |
| 3 | Europe | 86.3% | 29.9% |
The company is keen on expansion; this is exemplified by the fact that, by end of the quarter,Ă‚ it operated 509 stores as compared to 395 stores in the same quarter last year. Kors had 194 additional retail stores, including concessions, operated through licensing partners. Including licensed locations, there were 703 Michael Kors stores worldwide at the end of the third quarter of fiscal 2015.
Journey ahead
After having stupendous third-quarter results, the company is confident to continue its growth momentum in the last quarter of the fiscal 2015. The anticipated revenue in the last quarter is expected to be in the range of $1.05 to $1.08 billion. For fiscal 2015, the company now expects consolidated revenue to be around $4.4 billion.
Diluted earnings per share are expected to be in the range of $0.89 to $0.92 for the fourth quarter of fiscal 2015. For the fiscal 2015, the company anticipates diluted earnings per share to be in the range of $4.27 to $4.30.
The company foresees an increasing interest in its luxury products range and anticipates huge solid opportunities for expansion. The company is focused on its expansion and plans to have over 400 stores in North America in the future.
Share repurchase program
The company stays focused on its share repurchase programs; this exemplifies the management’s ability to generate strong free cash flow and long-term growth objective, also safeguarding the investor’s interest. Repurchase programs have positive impact on the EPS as the share outstanding is reduced after each share repurchase programs; this enables it to maintain a healthy EPS. This also gains the confidence of an investor in the company.
During the quarter, the company repurchased 5,068,813 shares of the company’s ordinary shares and spent around $399.9 million.
Competitors
Coach (COH, Financial) is one of the closest rivals of Kors, but it has been giving a tough time to Coach. Kors' entry into the clothing and accessories section has created a rough time for Coach. Kors has been constantly gaining market share in the segment of fashion industry. This goes on to prove that new customers are more inclined towards Kors, and companies like Coach are losing customers. As per an analyst at ITG Investment Research, “Coach customers are getting to be Kors customers." Furthermore, Coach is relying heavily on the Chinese market for sustained growth, while Kors already has strong footprints in the Chinese market. This again can be major worry for Coach.
Conclusion
Michael Kors has growth strategies that look very impressive with outstanding developments that can propel its growth in the future and benefit the investors. The company is also recording growth in various regions globally, which again is a good sign. The organization's strategies look impressive, and its development is outstanding. Likewise, Kors' earnings are relied upon to grow at a good pace in the future. This makes it an attractive investment prospect. Moreover, the stocks are being traded at around $64, this is close to the 52 weeks low high price slab of $63.3 to $99.2. Investors should consider Kors and include it in their portfolio.
