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Michael Kors Going Back to Investors to Raise $1.3 Billion

Insiders unloading a boatload of shares


Since its IPO in mid-December, the shares of luxury designer Michael Kors (NYSE:KORS) have soared by 127%. The company now has a market cap of $8.6 billion, which is close to the value of prominent luxury stock Tiffany & Co. (NYSE:TIF).

The next step for Michael Kors: Get more money.

This week, the company filed the necessary papers for a secondary offering that could result in as much as $1.3 billion in new funds.

Now, the cash won’t go into the company’s coffers. Rather, the transaction will be a cash-out for insiders. CEO John Idol plans to sell 1.7 million shares, and the founder of the company, Michael Kors, intends to unload 3 million shares. The company’s private equity sponsor, Sportswear Holdings, also plans to sell 11.7 million shares.

This type of heavy selling normally would spook investors, but there’s some reason to be optimistic. KORS estimates that fiscal fourth-quarter earnings will come to 14 to 16 cents per share, up from the prior guidance of 10 cents to 12 cents per share, and revenues will range from $350 million to $360 million.

So, don’t worry too much about the selling, and find some comfort in Michael Kors’ good growth clip.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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