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Michael Kors Touches a 52-Week High: Can the Rally Continue?
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Shares of Michael Kors Holdings Limited hit a new 52-week high of $75.94 on Aug 21, though it closed a tad lower at $75.41. Notably, the company has been gaining from its strategic endeavors apparent from its sturdy results in first-quarter fiscal 2019.
Impressively, this Zacks Rank #1 (Strong Buy) stock also surged 80.4% in a year, outperforming the Textile-Apparel industry’s growth of 44.2%. The industry ranks among the top 36% (91 of 256) of all Zacks industries.
Growth Catalysts
Michael Kors remains on track with its Runway 2020 strategic plan, which focuses on product innovation, brand engagement, fleet modernization, digital innovation and customer experience. During fiscal 2018, the company closed 47 Michael Kors full-price retail stores under the retail fleet optimization plan. This is part of the company’s previously-announced plan of shuttering 100-125 stores within a period of two years, with the broader target of achieving annualized savings of $60 million. The company also intends to close 25 stores in fiscal 2019.
The company is gaining from robust performance in its e-commerce business. Management will invest heavily in upgrading the company’s e-commerce platform. In the first quarter of fiscal 2019, e-commerce drove comparable sales by 250 basis points. The company has also rolled out Kors Connect tool in the United States and Europe, which allows its associates to better engage with customers.
Additionally, accretive buyouts, such as that of Jimmy Choo, will drive international growth and create a strong base in the luxury footwear segment along with diversifying its product portfolio. Michael Kors is also expanding its product mix beyond handbags, into men’s footwear and women’s ready to wear.
Impressive Surprise History & Estimates
Michael Kors’ earnings outpaced the Zacks Consensus Estimate for 13 straight quarters. Also, the company delivered an average positive earnings surprise of 35.7% in the trailing four quarters. It surpassed sales estimates in six of the last seven quarters as well.
Furthermore, analysts are steadily growing bullish on the stock following the company’s upbeat projection. Notably, the Zacks Consensus Estimate of $5.01 and $5.33 for fiscal 2019 and 2020 has moved north by 23 cents and 22 cents, respectively, in the last 30 days. The estimate of $1.81 for the second quarter has also inched up by a penny in the same time frame.
Management has guided second-quarter adjusted earnings in a band of $1.03-$1.08 per share. Michael Kors expects adjusted earnings per share in the range of $4.90-$5.00 in fiscal 2019, up from the previous guidance of $4.65-$4.75 per share.
Bottom Line
Though these attributes raise the stock’s optimism, the company’s operating margin looks somewhat pressurized and is likely to decline year over year in the fiscal second quarter. Moreover, management expects wholesale revenues to decline in low-single digits and licensing revenues to fall in the high-single digits during both the second quarter and fiscal 2019.
However, we expect the company’s robust strategies to offset these hurdles and help it continue with its growth trajectory.
Apart from Michael Kors, companies like Burlington Stores, Inc. (BURL - Free Report) , Nike Inc. (NKE - Free Report) and Best Buy Co., Inc. (BBY - Free Report) also scaled 52-week highs on Aug 21.
Shares of Burlington Stores hit a 52-week high of $172.65, though it closed a tad lower at $166.89. The stock carries a Zacks Rank #3 (Hold).
Shares of Nike hit a 52-week high of $83.08, though it closed a tad lower at $82.95. The stock carries a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Michael Kors Touches a 52-Week High: Can the Rally Continue?
Shares of Michael Kors Holdings Limited hit a new 52-week high of $75.94 on Aug 21, though it closed a tad lower at $75.41. Notably, the company has been gaining from its strategic endeavors apparent from its sturdy results in first-quarter fiscal 2019.
Impressively, this Zacks Rank #1 (Strong Buy) stock also surged 80.4% in a year, outperforming the Textile-Apparel industry’s growth of 44.2%. The industry ranks among the top 36% (91 of 256) of all Zacks industries.
Growth Catalysts
Michael Kors remains on track with its Runway 2020 strategic plan, which focuses on product innovation, brand engagement, fleet modernization, digital innovation and customer experience. During fiscal 2018, the company closed 47 Michael Kors full-price retail stores under the retail fleet optimization plan. This is part of the company’s previously-announced plan of shuttering 100-125 stores within a period of two years, with the broader target of achieving annualized savings of $60 million. The company also intends to close 25 stores in fiscal 2019.
The company is gaining from robust performance in its e-commerce business. Management will invest heavily in upgrading the company’s e-commerce platform. In the first quarter of fiscal 2019, e-commerce drove comparable sales by 250 basis points. The company has also rolled out Kors Connect tool in the United States and Europe, which allows its associates to better engage with customers.
Additionally, accretive buyouts, such as that of Jimmy Choo, will drive international growth and create a strong base in the luxury footwear segment along with diversifying its product portfolio. Michael Kors is also expanding its product mix beyond handbags, into men’s footwear and women’s ready to wear.
Impressive Surprise History & Estimates
Michael Kors’ earnings outpaced the Zacks Consensus Estimate for 13 straight quarters. Also, the company delivered an average positive earnings surprise of 35.7% in the trailing four quarters. It surpassed sales estimates in six of the last seven quarters as well.
Furthermore, analysts are steadily growing bullish on the stock following the company’s upbeat projection. Notably, the Zacks Consensus Estimate of $5.01 and $5.33 for fiscal 2019 and 2020 has moved north by 23 cents and 22 cents, respectively, in the last 30 days. The estimate of $1.81 for the second quarter has also inched up by a penny in the same time frame.
Management has guided second-quarter adjusted earnings in a band of $1.03-$1.08 per share. Michael Kors expects adjusted earnings per share in the range of $4.90-$5.00 in fiscal 2019, up from the previous guidance of $4.65-$4.75 per share.
Bottom Line
Though these attributes raise the stock’s optimism, the company’s operating margin looks somewhat pressurized and is likely to decline year over year in the fiscal second quarter. Moreover, management expects wholesale revenues to decline in low-single digits and licensing revenues to fall in the high-single digits during both the second quarter and fiscal 2019.
However, we expect the company’s robust strategies to offset these hurdles and help it continue with its growth trajectory.
Apart from Michael Kors, companies like Burlington Stores, Inc. (BURL - Free Report) , Nike Inc. (NKE - Free Report) and Best Buy Co., Inc. (BBY - Free Report) also scaled 52-week highs on Aug 21.
Shares of Best Buy hit a 52-week high of $81.82, closing marginally lower at $81.43. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Burlington Stores hit a 52-week high of $172.65, though it closed a tad lower at $166.89. The stock carries a Zacks Rank #3 (Hold).
Shares of Nike hit a 52-week high of $83.08, though it closed a tad lower at $82.95. The stock carries a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>