Seeking Alpha
Profile| Send Message|
( followers)  

Michael Kors (NYSE:KORS) is back to a Zacks No. 1 Rank after another stellar earnings report this month. While other retailers are missing their comps, lowering guidance, and generally blaming the weather for everything, this global brand is hitting its growth stride. In fact, since March 2012 -- after the company's first quarterly report following their IPO in December 2011 -- KORS has consistently been a No. 1 Strong Buy or No. 2 Buy, and we've seen the stock rise from the mid-$40s to $70.

This earnings momentum is built on high double-digit sales growth, global expansion in branded outlets and top high-end retailers, and a wide diversity of apparel and accessories for men and women that command must-have fashion sense. They also position many of their products at more affordable price points, what the company calls "accessible luxury."

Still Early in KORS Global Domination

The Zacks proprietary Price and Consensus chart below shows the rapid rise in analyst earnings estimates. While it may be tempting to think that this kind of growth must eventually level off (think Apple), most analysts believe that this brand, and management's multi-channel strategy and superior execution, have a few more good years left in them.

Here's how my colleague Brian Bolan recently characterized the KORS story:

Over the last three earnings reports, the company posted a positive revenue surprise in each, and these are not little beats, they are big. The December 2012 quarter saw a massive beat of $97M or 17.7% ahead of expectations. That propelled the income statement to post a bottom line beat of 60%.

The March 2013 quarter had a $55M beat, 10% above expectations. The bottom line saw a 35% beat in that quarter. And the most recent quarter saw revenues come in $69M ahead of expectations for a 12% beat. The analysts are getting a little better, so the bottom line was only a beat of 24%, and I say only sarcastically.

Whale Watching

Brian was also writing about KORS because he believes that institutional investors are still getting to this story late and as more portfolio managers discover the company, the stock is destined for loftier heights. I happen to agree, as I bought the stock for Zacks Follow The Money trader in early July at $63. And so I was glad to see a big "whale" join me a few weeks later as Steve Mandel of Lone Pine Capital announced in an SEC filing that his fund has acquired a 5.2% position.

If you are not familiar with the KORS brand and its hundreds of products from head to toe, including watches, just go to the Macy's website and see what they have to offer. At least now you are familiar with the business story and its phenomenal high double-digit growth that has enough diversity and global reach to ride out the retailer woes of "too hot, too cold, too wet, too dry."

It also helps that Kors is currently the "it" brand when it comes to fashion tastes. I'm betting it can maintain the allure and must-have status. In a fickle storm of battered fashion stocks like Aeropostale (NYSE:ARO) and Abercrombie & Fitch (NYSE:ANF), Michael Kors is one name that will probably never blame the weather for anything.

Abercrombie & Fitch: Free Stock Analysis Report (email registration required)

Aeropostale: Free Stock Analysis Report (email registration required)

Michael Kors: Free Stock Analysis Report (email registration required)

Macy's: Free Stock Analysis Report (email registration required)

Source: Bull Of The Day: Michael Kors