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Michael Kors Holdings Limited

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Shares of Michael Kors have underperformed the industry in the past six months. Better-than-expected results in fourth-quarter fiscal 2017 failed to cushion the stock price as investors’ sentiments were hit hard due to year-over-year decline registered in both the top line and bottom line. The company also provided a bleak outlook. Michael Kors envisions fiscal 2018 total revenue to be approximately $4.25 billion and comparable sales to decrease in the high-single digit range. Management anticipates earnings in the band of 3.57–$3.67 per share for the fiscal year, sharply below the fiscal 2017 earnings per share of $4.48. Nevertheless, the company has been constantly deploying resources to expand product offerings, open new stores, build shop-in-shops and upgrade eCommerce platform. We note that despite the possibility of heavy investments weighing on margins in the short term, management continues to take up strategic endeavors.

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