In a strong economy with low unemployment and rising wages, consumers with disposable income are increasingly interested in higher-end apparel and accessory choices. Three stocks in particular have handily outperformed the major averages in 2018 and their strong earnings and guidance and recent upward analyst revisions have taken all three to the top of the Zacks Ranks.
Michael Kors Holdings (KORS), which markets its own branded merchandise as well as Jimmy Choo shoes, blew away the Zacks Consensus estimate in fiscal Q1, beating their own previous guidance in revenue, gross margin, operating margin and EPS growth. The company earned $1.32/share in the quarter, topping estimates of $0.94/share. Contributing to the gains were increases in revenues across the board in Retail, Wholesale and Licensing of the MK core brands as well as Jimmy Choo.
The company also raised guidance for full year 2018 by $0.25/share to a range of $4.90 - $5.00, “reflecting better than expected first quarter performance for both the Michael Kors and Jimmy Choo brands.
Analyst forecasts were updated accordingly with the Zacks Consensus estimate now at $5.01/share, up from $4.76/share before the August 8th announcement. KORS is a Zacks Rank #1 (Strong Buy).
Having repurchased approximately $100 million worth of shares in the quarter, KORS has $532 billion remaining in a previously authorized buyback program.
Columbia Sportswear (COLM - Free Report) recently posted its 16th consecutive earnings beat at the end of July, earning $0.16/share against an expected loss of $0.10/share. This represented an increase of 124% in earnings over the prior year period, thanks to a 21% increase in net sales – to a record $482M - and a 6% improvement in operating margins.
Share prices at Columbia have responded to the strong earnings performance, up over 200% since 2014 and 26% in 2018.
CEO Tim Boyle explained “Our better than expected second quarter and record first half results reflect continued momentum across our brand portfolio.” He continued, “We are excited about the second half of 2018, which we expect to include broad-based revenue growth, increased demand creation spending, and continued investment in our strategic priorities.”
The company raised full year earnings guidance to a range of $3.15 - $3.25/share. Analysts appear optimistic about the prospects of continued outperformance and the Zacks Consensus Estimate for 2018 now stands at $3.47/share, an increase of 16% over 2017. COLM is a Zacks Rank #1 (Strong Buy).
High-end fashion giant Ralph Lauren (RL - Free Report) operates the venerable Polo brand and a dozen other labels, including Chaps and Ralph Lauren for Women. They manufacture and market clothing and accessories for both men and women across the spectrum from casual sportswear to formalwear as well as accessories and fragrances.
In RL’s most recent earnings release on July 31st – the company’s fiscal first quarter - they beat on both the top and bottom lines, reporting earnings of $1.54/share on sales of $1.39B, versus Zacks Consensus Estimates of $1.39/share and $1.36b, respectively. It was Ralph Lauren’s 14th consecutive positive earnings surprise.
Full year 2018 earnings are now expected to be $6.64/share, up from $6.28 60 days ago. Estimates for 2019 have increased from $6.88/share to $7.15/share over the same period. RL is a Zacks Rank #1 (Strong Buy).
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