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Michael Kors’ Q1 Earnings Sparkle

The company continues its sizzling run after strong Q1


Luxury operator Michael Kors (NYSE:KORS) enjoyed another blowout earnings report Tuesday, and investors are cheering to the tune of 14% gains in midday trading.

Fiscal first-quarter revenues surged by 71% to $414.9 million, and profits came to $68.6 million (34 cents per share), which topped analyst expectations of $365 million and 20 cents per share, as well as the company’s own forecast for the quarter.

The momentum is expected to continue. Michael Kors has raised its full-year guidance for earnings to $1.32 to $1.34 a share, up from the prior forecast of $1.08 to $1.12 a share. Revenues are expected to range from $1.8 billion to $1.9 billion, better than previous guidance of $1.7 billion to $1.8 billion.

Michael Kors has been smart to greatly expand its distribution, such as with in-store shops, company-owned retail locations and licensing deals. At the same time, the company has continued to create must-have apparel; Michael Kors is rapidly becoming an icon luxury brand.

KORS has been nearly flawless since its mid-December IPO — it priced at $20, and has more than doubled in less than a year. But investors should be cautious for that very reason. The company’s run-up has resulted in a hefty P/E of 62 — so just a small drop in the growth rate could make the stock vulnerable to a short-term rattling.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. 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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