When a Good Deal on a Michael Kors Handbag Is a Bad Thing

by Christopher Freeburn | December 28, 2012 10:28 am

[1]Shares of Michael Kors (NYSE:KORS[2]) dropped more than 2% in Friday morning trading as investors digested an analyst’s recent comments about the brand’s sales trends[3].

On Thursday, Citigroup‘s (NYSE:C[4]) Oliver Chen warned that some Michael Kors handbags had been steeply discounted at retail stores, with some marked down 50%, Barron‘s noted.

Despite that observation, Chen continued to rate Michael Kors shares as a buy, though he trimmed his target price for the stock from a previous $68 a share, down to $60. He noted that Michael Kors products remained popular with consumers and that the company continued to outsell rival brands.

Chen forecasts Michael Kors will post third-quarter earnings of 43 cents a share, down from an earlier forecast of 45 cents per share. That compares to a Wall Street consensus of 41 cents a share.

Michael Kors shares have risen more than 80% since their initial public offering last year[5], trading on the iconic designer’s popularity and savvy management moves.

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