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Can Range-Bound Kors Get Out of Its Rut?

Holiday shopping could be the catalyst the stock needs


Luxury apparel operator Michael Kors (NYSE:KORS) came public about a year ago at $20 and quickly racked up some nice gains. By the summer, the stock price reached about $53 to $54.

The problem: It seems to be stuck now. But that could be giving investors an opportunity to pick up KORS shares. Let’s see if that’s so.

Options for Making the Holiday Season Merry
Options for Making the Holiday Season Merry

Michael Kors, who started his company over 30 years ago, is a fashion genius. But he was also smart to bring in a hotshot CEO to run the company, John Idol (who was at the helm of Donna Karan from 1997 to 2001). He has expanded Kors’ distribution footprint with a multi-format strategy, which include collection stores, lifestyle stores and outlet stores.

There are also in-store locations, with partners like Saks Fifth Avenue (NYSE:SKS), Neiman Marcus, Nordstrom (NYSE:JWN) and Macy’s (NYSE:M).

Idol has built a thriving licensing business as well. You can find the Kors brand on products like watches, eyewear and fragrances.

The moves have paid off. In the latest quarter, revenues soared by 74% to $532.9 million and operating earnings came to $157.9 million. Keep in mind that the growth rate in the same period a year ago was 58.3%. In other words, Kors has somehow been able to accelerate its ramp.

It’s true that the uncertainty in the global economy could be a drag. Just look at Tiffany (NYSE:TIF). The high-end retailer’s stock is off by 7% today because of a disappointing earnings report.

Yet Kors is likely to remain immune from such troubles. The fact is it has became a global luxury brand that has attracted celebrities like Angelina Jolie, Heidi Klum, Blake Lively, Penelope Cruz, Gwyneth Paltrow and Catherine Zeta-Jones.

Let’s face it, many wealthy people who have money to spend seem to view Kors as a great choice. So, with the Christmas season in full gear, the company looks positioned for continue growth — and that could get the stock price out of its rut.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders” and How to Create the Next Facebook.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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