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Three Reasons Why Michael Kors (KORS) is Down 7% in 3 Months
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A glimpse of Michael Kors Holdings Ltd. share price movement reveals that it has declined 7% in the past three months. In fact in the past six months, the stock has nosedived roughly 17.3% compared with the Zacks categorized Textile-Apparel Manufacturing industry’s fall of 2.8%. On the contrary, Consumer Discretionary sector, which occupies a top 25% (4 out of 16) position among the Zacks categorized sectors, has advanced 10.4%.
Further, Michael Kors’ Growth Score of “C” and Momentum Score of “F” clearly indicates that the stock is likely to spiral downward in the coming days. Additionally, a downtrend in the Zacks Consensus Estimate in the past 30 days also echoes the same sentiment. We have tried to ascertain major reasons that can be held responsible for this Zacks Rank # 5 (Strong Sell) stock’s dismal show in the bourses.
Waning Top-Line & Dismal Comps
Stiff competition, falling comps, aggressive promotional environment and waning mall traffic are making things tough for Michael Kors. We noted that comparable sales had fallen 14.1% in the final quarter of fiscal 2017, following declines of 6.9%, 5.4% and 7.4% in the third, second and first quarters, respectively. The company is also struggling with its top-line performance. After registering a meager growth of 0.2% in the first quarter of fiscal 2017, it had declined 3.7%, 3.2% and 11.2% in the second, third and fourth quarters of fiscal 2017.
Wholesale Segment Dismal Performance Continues
Michael Kors’ wholesale segment continues to pose concern for the investors. In fourth-quarter fiscal 2017, wholesale segment sales declined 22.8% to $456.1 million primarily due to dismal performance of Americas and European region, while on a constant currency basis, it fell 22.3%. In the third, second and first quarters of fiscal 2017, wholesale segment sales declined 17.8%, 18.4% and 7%, respectively. In fiscal 2018, the company expects wholesale segment to decrease in the low-teens range.
Muted Outlook Hurt the Stock
Despite Michael Kors’ better-than-expected fourth-quarter fiscal 2017 results, investors’ sentiments were hit hard due to a bleak outlook. Management now envisions fiscal 2018 total revenue to be approximately $4.25 billion (down from $4.71 billion generated in fiscal 2017) and comparable sales to decrease in the high-single digit range. The company anticipates earnings in the band of 3.57–$3.67 per share for the fiscal year, significantly below the fiscal 2017 and 2016 earnings per share of $4.24 and $4.48, respectively. For the first quarter of fiscal 2018, Michael Kors forecasts total revenue between $910 million and $930 million down from $987.9 million reported in the year-ago quarter, and expects comparable sales to decline in the high-single digit range.
In the past 30 days, the Zacks Consensus Estimate of $3.55 for fiscal 2018 has declined 38 cents. Moreover, for the first quarter the same has dropped 14 cents to 61 cents.
Nevertheless to be in the race, the company has been constantly deploying resources to expand product offerings, build shop-in-shops and upgrade eCommerce platform. In an effort to increase the profitability in stores fleet, the company has announced its intention to close between 100 to 125 full priced retail stores over the next two years.
Conn's delivered an average positive earnings surprise of 80.9% in the trailing four quarters and has a long-term earnings growth rate of 18.5%.
Big 5 Sporting Goods delivered an average positive earnings surprise of 94.5% in the trailing four quarters and has a long-term earnings growth rate of 9%.
Children's Place delivered an average positive earnings surprise of 36.6% in the trailing four quarters and has a long-term earnings growth rate of 8%.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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Three Reasons Why Michael Kors (KORS) is Down 7% in 3 Months
A glimpse of Michael Kors Holdings Ltd. share price movement reveals that it has declined 7% in the past three months. In fact in the past six months, the stock has nosedived roughly 17.3% compared with the Zacks categorized Textile-Apparel Manufacturing industry’s fall of 2.8%. On the contrary, Consumer Discretionary sector, which occupies a top 25% (4 out of 16) position among the Zacks categorized sectors, has advanced 10.4%.
Further, Michael Kors’ Growth Score of “C” and Momentum Score of “F” clearly indicates that the stock is likely to spiral downward in the coming days. Additionally, a downtrend in the Zacks Consensus Estimate in the past 30 days also echoes the same sentiment. We have tried to ascertain major reasons that can be held responsible for this Zacks Rank # 5 (Strong Sell) stock’s dismal show in the bourses.
Waning Top-Line & Dismal Comps
Stiff competition, falling comps, aggressive promotional environment and waning mall traffic are making things tough for Michael Kors. We noted that comparable sales had fallen 14.1% in the final quarter of fiscal 2017, following declines of 6.9%, 5.4% and 7.4% in the third, second and first quarters, respectively. The company is also struggling with its top-line performance. After registering a meager growth of 0.2% in the first quarter of fiscal 2017, it had declined 3.7%, 3.2% and 11.2% in the second, third and fourth quarters of fiscal 2017.
Wholesale Segment Dismal Performance Continues
Michael Kors’ wholesale segment continues to pose concern for the investors. In fourth-quarter fiscal 2017, wholesale segment sales declined 22.8% to $456.1 million primarily due to dismal performance of Americas and European region, while on a constant currency basis, it fell 22.3%. In the third, second and first quarters of fiscal 2017, wholesale segment sales declined 17.8%, 18.4% and 7%, respectively. In fiscal 2018, the company expects wholesale segment to decrease in the low-teens range.
Muted Outlook Hurt the Stock
Despite Michael Kors’ better-than-expected fourth-quarter fiscal 2017 results, investors’ sentiments were hit hard due to a bleak outlook. Management now envisions fiscal 2018 total revenue to be approximately $4.25 billion (down from $4.71 billion generated in fiscal 2017) and comparable sales to decrease in the high-single digit range. The company anticipates earnings in the band of 3.57–$3.67 per share for the fiscal year, significantly below the fiscal 2017 and 2016 earnings per share of $4.24 and $4.48, respectively. For the first quarter of fiscal 2018, Michael Kors forecasts total revenue between $910 million and $930 million down from $987.9 million reported in the year-ago quarter, and expects comparable sales to decline in the high-single digit range.
In the past 30 days, the Zacks Consensus Estimate of $3.55 for fiscal 2018 has declined 38 cents. Moreover, for the first quarter the same has dropped 14 cents to 61 cents.
Nevertheless to be in the race, the company has been constantly deploying resources to expand product offerings, build shop-in-shops and upgrade eCommerce platform. In an effort to increase the profitability in stores fleet, the company has announced its intention to close between 100 to 125 full priced retail stores over the next two years.
Stocks that Warrant a Look
Investors may consider better-ranked stocks such as Conn's, Inc. (CONN - Free Report) , Big 5 Sporting Goods Corporation (BGFV - Free Report) and The Children's Place, Inc. (PLCE - Free Report) . All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Conn's delivered an average positive earnings surprise of 80.9% in the trailing four quarters and has a long-term earnings growth rate of 18.5%.
Big 5 Sporting Goods delivered an average positive earnings surprise of 94.5% in the trailing four quarters and has a long-term earnings growth rate of 9%.
Children's Place delivered an average positive earnings surprise of 36.6% in the trailing four quarters and has a long-term earnings growth rate of 8%.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks ""Strong Sells"" absolutely free >>.