Michael Kors Rose on Increase in Fiscal 3Q16 Revenue
MAT, KORS, and ENR Led Consumer Sector Last Week
Price movement of Michael Kors
Michael Kors Holdings (KORS) rose by 29.9% to close at $51.84 per share at the end of the first week of February 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 29.9%, 30.4%, and 29.4%, respectively.
At times, the stock has broken the support of all moving day averages. Currently, KORS is trading 30.8% above its 20-day moving average, 27.5% above its 50-day moving average, and 16.3% above its 200-day moving average.
The First Trust ISE ChIndia Fund (FNI) invests 5.1% of its holdings in Michael Kors. The ETF tracks an index of stocks from China and India screened by market cap and weighted in tiers. The YTD price movement of FNI is -12.6% as of February 4, 2016.
The AdvisorShares TrimTabs Float Shrink (TTFS) invests 0.96% of its holdings in Michael Kors. The ETF aims to outperform broad US equities. The actively managed, equal-weighted fund selects stocks based on trends in outstanding shares, firm leverage, and free cash flow.
The market caps of Michael Kors’ competitors are as follows:
Ralph Lauren (RL): $7.3 billion
Coach (COH): $9.7 billion
Performance of Michael Kors in fiscal 3Q16
Michael Kors reported 3Q16 total revenue of $1,397.5 million, a rise of 6.3% compared to total revenue of $1,314.7 million in fiscal 3Q15. Revenue for the company’s retail, wholesale, and licensing segments rose by 11.1%, 0.30%, and 8.4%, respectively, in fiscal 3Q16 compared to revenue in fiscal 3Q15. The company’s cost of goods sold as a percentage of total revenue rose by 2.6%, and its operating income fell by 2.2% in fiscal 3Q16 compared to fiscal 3Q15.
Its net income and EPS (earnings per share) fell to $294.6 million and $1.59, respectively, in fiscal 3Q16, compared to $303.7 million and $1.48, respectively, in fiscal 3Q15.
Meanwhile, its cash and cash equivalents fell by 28.8%, and its inventories rose by 13.2% in fiscal 3Q16 compared to fiscal 4Q15. Its current ratio fell to 3.9, and its debt-to-equity ratio rose to 0.28 in fiscal 3Q16 compared to a current ratio and a debt-to-equity ratio of 6.1 and 0.20, respectively, in fiscal 4Q15.
The company has repurchased 4,682,121 of its shares for ~$200.0 million in open market transactions. As of December 26, 2015, the remaining availability under its share repurchase program was $558.1 million.The company’s PE (price-to-earnings) and PBV (price-to-book value) ratios are 11.9x and 4.8x, respectively, as of February 5, 2016.
Projections
The company has made the following projections for fiscal 4Q16:
total revenue in the range of $1.13 billion to $1.15 billion, which includes ~$36 million of additional sales due to the 53rd week.
Comparable store sales will be flat on a reported basis but increase in the low single digits on a constant currency basis.
EPS will be in the range of $0.93 to $0.97.
The tax rate will be ~27.5%.
The company expects foreign currency to impact net income by ~$3 million and EPS by ~$0.02.
The company has made the following projections for fiscal 2016:
Total revenue will be ~$4.7 billion.
EPS will be in the range of $4.38 to $4.42.
The tax rate will be 28.5%.
The company expects foreign currency to impact net income by ~$38 million and EPS by ~$0.20.
On February 2, 2016, Citi upgraded Michael Kors to “neutral” from “sell.” On the other hand, Standpoint downgraded the company’s rating to “hold” from “buy.”
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