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Why June is Turning out Great for Michael Kors (KORS)?
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Shares of Michael Kors Holdings Limited , which declined more than 19% in May, has found favor with investors in June. Keep reading to find out what really has changed for this Zacks Rank #3 (Hold) company in June and why investors are optimistic about the stock.
Robust Earnings Reverses the May Slide
Despite a competitive retail landscape and foreign currency headwinds, Michael Kors managed to maintain its positive earnings surprise streak for the fourth consecutive quarter with impressive fourth-quarter fiscal 2016 results.
Ever since Michael Kors reported robust fiscal fourth-quarter numbers on Jun 1, 2016, the company’s shares have gained 16.3%. The luxury lifestyle retailer’s earnings per share of 98 cents increased 8.9% year over year and also surpassed the Zacks Consensus Estimate of 96 cents. Further, total revenue of 1,198.7 million came in above the Zacks Consensus Estimate of $1,150 million. The top line also climbed 10.9% year over year. The top line was primarily driven by an increase in retail net sales in the Americas, Europe and Asia.
Following Michael Kors’ sturdy performance, the Zacks Consensus Estimate has witnessed upward estimate revisions. Analysts polled by Zacks are convinced that the stock will deliver an upbeat performance in the future. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2017 and fiscal 2018 has moved up by 7 cents and 32 cents to $4.61 and $4.91, respectively.
Global Expansion Prospects
Michael Kors has been focusing on store expansion to drive top-line growth. In fiscal 2016, the company opened 142 new stores, which included 47 in the Americas and 95 worldwide. At the end of the quarter, the company had 869 stores across the globe, which included licensed locations. In fiscal 2017, the company is expected to open 15 stores in Americas, 40 in Asia and 20 in Europe. Given the scope for high profitability from company-owned stores, management is putting more emphasis on opening retail stores.
The company announced that it has completed the buyout of Michael Kors (HK) Limited, the exclusive licensee in China and certain other jurisdictions in Asia, for $500 million in cash. In fiscal 2016, the company generated revenues of $197 million from Greater China. The acquisition is expected to garner sales worth $200 million in fiscal 2017.
Stocks to Consider
Some better-ranked stocks in the retail sector include Delta Apparel Inc. (DLA - Free Report) , Perry Ellis International Inc. and The Children's Place, Inc. (PLCE - Free Report) . Delta Apparel sports a Zacks Rank #1 (Strong Buy), while Perry Ellis International and The Children's Place hold a Zacks Rank #2 (Buy).
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Why June is Turning out Great for Michael Kors (KORS)?
Shares of Michael Kors Holdings Limited , which declined more than 19% in May, has found favor with investors in June. Keep reading to find out what really has changed for this Zacks Rank #3 (Hold) company in June and why investors are optimistic about the stock.
Robust Earnings Reverses the May Slide
Despite a competitive retail landscape and foreign currency headwinds, Michael Kors managed to maintain its positive earnings surprise streak for the fourth consecutive quarter with impressive fourth-quarter fiscal 2016 results.
Ever since Michael Kors reported robust fiscal fourth-quarter numbers on Jun 1, 2016, the company’s shares have gained 16.3%. The luxury lifestyle retailer’s earnings per share of 98 cents increased 8.9% year over year and also surpassed the Zacks Consensus Estimate of 96 cents. Further, total revenue of 1,198.7 million came in above the Zacks Consensus Estimate of $1,150 million. The top line also climbed 10.9% year over year. The top line was primarily driven by an increase in retail net sales in the Americas, Europe and Asia.
MICHAEL KORS Price, Consensus and EPS Surprise
MICHAEL KORS Price, Consensus and EPS Surprise | MICHAEL KORS Quote
Favorable Estimate Revisions
Following Michael Kors’ sturdy performance, the Zacks Consensus Estimate has witnessed upward estimate revisions. Analysts polled by Zacks are convinced that the stock will deliver an upbeat performance in the future. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2017 and fiscal 2018 has moved up by 7 cents and 32 cents to $4.61 and $4.91, respectively.
Global Expansion Prospects
Michael Kors has been focusing on store expansion to drive top-line growth. In fiscal 2016, the company opened 142 new stores, which included 47 in the Americas and 95 worldwide. At the end of the quarter, the company had 869 stores across the globe, which included licensed locations. In fiscal 2017, the company is expected to open 15 stores in Americas, 40 in Asia and 20 in Europe. Given the scope for high profitability from company-owned stores, management is putting more emphasis on opening retail stores.
The company announced that it has completed the buyout of Michael Kors (HK) Limited, the exclusive licensee in China and certain other jurisdictions in Asia, for $500 million in cash. In fiscal 2016, the company generated revenues of $197 million from Greater China. The acquisition is expected to garner sales worth $200 million in fiscal 2017.
Stocks to Consider
Some better-ranked stocks in the retail sector include Delta Apparel Inc. (DLA - Free Report) , Perry Ellis International Inc. and The Children's Place, Inc. (PLCE - Free Report) . Delta Apparel sports a Zacks Rank #1 (Strong Buy), while Perry Ellis International and The Children's Place hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>