Category Archives: $KORS

$KORS (Michael Kors) – Questrom says dont dump stock after 25% fall, FV shows…

Kors crashed 25% last week, surprising investors with their results which show slowing sales and significant slow down in growth – particularly in North America.

For Luxury fashion retailers Brand is key, and creating oversupply can destroy the brand – this is the paradox – the stocks go way too high as growth expectations rise, as management tries to meet the expectations it creates an oversupply which denigrates the brand, if the over supply of stock is discounted to get it sold, this creates even more damage to the brand.

So getting the right product mix, keeping the supply limited and above all keeping up the brand image is key.
According to Allen Questrom, the retail Guru who came on CNBC this week, Kors is still has great design talent – and they need to spend the next quarter ensuring they protect the brand and not oversupply the market. He believes they have the management talent to do this and the brand is still strong as there is considerable design talent at Kors.

FV = 57 (from $65). which includes $5 in cash. The company said they will be buying back stock – if stock stays above $46, it could be the company buying the stock if they believe it has been over sold and now too cheap

If you agree and want to get involved recommend the following trade:

Buy if stock goes above $48, take profit target $57, stop $43.
Also, Listen to the conference call on earningscast.com. It is not as doom and gloom as the 25% sell off suggests.