* Third-quarter earnings/share $1.11 vs est $0.86
* Revenue jumps 59 pct to $1.01 bln vs est $859.9 mln
* Raises 2014 sales view to $3.18 bln-$3.19 bln vs est $3.03
* Raises 2014 earnings/share view to $3.07-$3.09 vs est
* Shares rise as much as 21 pct
(Adds comment from Esplanade Capital, closing share price)
By Maria Ajit Thomas
Feb 4 Michael Kors Holdings Ltd raised
its profit forecast for the year after its trendy handbags and
watches proved a hit with holiday shoppers, sending the
company's shares up as much as 21 percent to a record high.
The company, founded by fashion designer Michael Kors, has
grabbed market share from rivals such as Coach Inc by
recording sales growth of 40 percent or more every quarter since
going public in December 2011.
Shunning the discounts offered by many of its competitors,
Michael Kors prolonged this run in the holiday shopping season,
reporting a 59 percent jump in revenue for the quarter ended
"Once upon a time, Coach was the go-to brand in accessible
luxury, a superlative KORS now holds," Randal Konik, analyst at
brokerage Jefferies & Co, wrote in a note.
Michael Kors' bag collection ranges from clutches and
wristlets with a price tag of around $100 to snakeskin handbags
costing around $3,000. The company also sells watches and
With a market capitalization of $18.3 billion at Tuesday's
close, the company has already grown bigger than Coach, which is
valued at about $12.8 billion.
At those levels, Michael Kors' stock is valued at 31.77
times forward earnings, almost double that of Coach and Fossil
Group Inc, according to Thomson Reuters data.
"I love the company and they are killing it," said Shawn
Kravetz, president of investment management firm Esplanade
Capital. "Unfortunately, in this market particularly, we only
buy things on sale and KORS is at full price."
Michael Kors' share of the U.S. handbag market rose to 7
percent from 4.5 percent between 2011 and 2012, according to
Euromonitor International. Coach's share fell to 17.5 percent
from 19 percent in the same period.
Brands such as Fossil, Jones Group Inc's
Nine West and Kering's Gucci also lost market share in
the same period.
Many retailers also took a hit during the 2013 holiday
shopping season, the most discount-driven since the recession.
Last month, Coach reported a sharp decline in North American
sales during the key holiday quarter - its third straight
quarter of decline.
In sharp contrast, Michael Kors on Tuesday posted a 51
percent jump in North American sales for its third quarter, and
said its gross margin rose 100 basis points to 61.2 percent.
"KORS is gaining market share at a dramatic pace across
numerous categories," Cowen and Co analyst Faye Landes wrote in
a note. "Clearly not all companies had a lousy holiday season."
Michael Kors also said revenue from Europe more than doubled
in the third quarter, despite the slowdown in many European
"There's still money being spent in these markets and
consumers are responding to the right product, presented in the
right way and delivered in the fashion environment," Chief
Executive John Idol said on a post-earnings call.
A former judge on TV show "Project Runway", Kors launched
his brand more than 30 years ago and retains a 2 percent stake
in the company, worth about $400 million at the current price.
The 54-year-old has designed clothes and accessories worn by
first lady Michelle Obama and celebrities including Gwyneth
Paltrow, Jennifer Hudson and Amber Heard.
The company's largest shareholder is Fidelity Management &
Research Co, with a 6.3 percent stake as of Sept. 30. At the
current price, the stake is worth about $1.15 billion.
Hong Kong-based Sportswear Holdings Ltd, led by Silas Chou
and Lawrence Stroll, who have had a hand in developing fashion
brands including Tommy Hilfiger and Pepe Jeans, also owns a
stake worth more than $1 billion.
Raising its full-year profit forecast for the third time,
Michael Kors said on Tuesday it expected earnings of $3.07-$3.09
per share for the year ending March 2014. Its earlier forecast
was $2.77-$2.81 per share.
The company also raised its revenue forecast for the year to
$3.18 billion-$3.19 billion from $2.9 billion-$3 billion.
Analysts on average expect a profit of $2.83 per share on
revenue of $3.03 billion, according to Thomson Reuters I/B/E/S.
Shares of Michael Kors closed at $89.91 on the New York
Stock Exchange on Tuesday.
Coach shares closed down almost 2 percent at $45.63.
(Additional reporting by Aditi Shrivastava and Shailaja Sharma
in Bangalore; Editing by Robin Paxton and Savio D'Souza)