Coach Vs. Michael Kors: Who Has More Runway Credibility?

Given its faster growth prospects and potential to steal share, we believe the P/E ratio is too low and believe it could be a great growth stock for investors. Source: Coach Vs. Michael Kors: Who Has More Runway Credibility? Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. This article was written by Hans Centena, one of our Senior Analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: Black Coral Research is not a registered investment advisor or broker/dealer.





Handbags, watches fashion Michael Kors upbeat forecast





In Europe, sales nearly doubled during the quarter despite broader economic headwinds as Michael Kors raised brand awareness, leading to a rise of 63% in European same-store sales. The maker of popular designer clothes and accessories, which went public in 2011, recently converted its stores into a branded "shop-in-shops" design. They have grown by 50% over the last 12 months. The designer sees current-quarter revenue in the range of $555 million to $565 million, assuming an improvement at its more established stores of roughly 20%. It anticipates EPS between 46 cents and 48 cents for the first quarter of fiscal 2014. Analysts on average are calling for slightly higher sales of $566.3 million on EPS of 48 cents. For the full year, Michael Kors anticipates sales in the range of $2.65 billion to $2.75 billion on a same-store sales improvement of 15% to 20%, and EPS between $2.43 and $2.47.





Michael Kors: A Value-Growth Combo You Can't Ignore





4. It effectively has no e-commerce business but plans to bring it in-house in 2014, which should drive a significant boost to revenue. 5. Valuation is extremely attractive, in our view, for a company with its square footage growth prospects. It's cheaper than lululemon and growing faster, and we believe handbags and accessories are more portable than LULU's yoga-inspired apparel. Bottom line, in the light of Michael Kors' strong fundamental, promising growth prospects, as well as its cheap valuation, the current stock price is in the buying zone. All charts are created by the author except for the consensus estimate tables, which are sourced from S&P Capital IQ , and all financial data used in the article and the charts is sourced from S&P Capital IQ unless otherwise specified.





Michael Kors Doubles 4Q Profit as Luxury Market Heats Up





(NYSE: COH ). Meanwhile, another luxury brand, high-end jewelerTiffany & Co. (NYSE: TIF ) also reported strong results. The state of the luxury market According to a report by Unity Marketing, the recent rebound in consumer spending can be mostly attributed to affluent consumers who earn between $100,000 and $250,000 per year and are known as the Henrys, which stands for High Earnings, Not Yet Rich. This group represents around 24.2 million households, or the top 20%. This group is believed to be behind most of the current consumer spending taking place. Ultra-affluent consumers, who earn more than $250,000 per year, were seen as making strategic trade-offs in their purchasing to maximize the luxury return on their investment. The research showed that their buying behavior has shifted and is very similar to that of the Henrys. They are trading down to less premium brands, for example shopping for jewelry at Zales rather than Tiffany & Co.





Michael Kors Up, Dollar Tree Down As Luxury Dominates





The company now makes pyramid-studded Saffiano leather handbags, watches and apparel worn by first lady Michelle Obama and celebrities including Jennifer Lopez. Michael Kors raised $944 million in its initial public offering just over a year ago, one of the biggest ever listings by a U.S. fashion company. The company now has a market capitalization of $12.6 billion. Kors, well-known for his work as a judge on the long-running television fashion show "Project Runway", held a 3.7 percent stake in the company as of December 31. At today's share price, this stake would be worth around $466 million. The company, which reported third-quarter results that comfortably beat Wall Street estimates, said the addition of new stores and the conversion of department store premises into branded "shop-in-shops" had drawn in more customers. A shop-in-shop is a mini-store within a larger department store that houses similar products. In total, there were 388 Michael Kors stores worldwide at the end of the third quarter, the company said.





Michael Kors Holdings Ltd (KORS)s Profits Signal Rise in Luxury Spending





Net sales rose 59%. Global same-store sales soared 36.7% vs. a year ago. Comps in North America surged 35%. Analysts see first-quarter profits up 44%. Discounters Discounted Luxury retailers typically cater to consumers with an annual household income above $90,000 who have the ability to spend more freely right now. "High-end earners have seen their wage growth rise rather sharply following the recession and have benefited from both the rebound in the stock and housing markets," said Perkins. Less-flush consumers have been more gun-shy about getting back into the stock Michael Kors Outlet Online market after the recession, says Perkins.