Retail

How Analysts View Michael Kors Before Earnings

Paul Ausick

Published: May 31, 2016 1:40 pm

Last Updated: January 13, 2020 7:22 am

High-end fashion retailer Michael Kors Holdings Ltd. (NYSE: KORS) is scheduled to report fiscal fourth-quarter results before Wednesday’s opening bell. Analysts are looking for earnings per share (EPS) of $0.97 and revenues of $1.15 billion, compared with EPS of $0.90 and revenues of $1.08 billion in the fourth quarter of 2015.

For the fiscal year that ended in March, analysts expect EPS of $4.42 and revenues of $4.66 billion. In fiscal 2015, Michael Kors posted EPS of $4.28 and $4.37 billion in revenue.

It’s no secret that retail earnings have been mostly weak so far in this round of reports, and Michael Kors got caught in the vortex in early May, dropping from around $51 to close last Friday below $42 a share. The shares posted a 52-week high in mid-March.

Although the company has not commented, analysts at Wedbush reported Tuesday that it had surveyed more than 100 Nordstrom Inc. (NYSE: JWN) stores and that half have stopped carrying Michael Kors’s line of “MICHAEL” branded handbags. Wedbush cut its price target to $43 and rates the stock at Neutral.

Other recent ratings changes we’ve seen include:

• Credit Suisse cut its price target from $57 to $49 with a Hold rating.
• Canaccord Genuity chopped its price target from $48 to $45 and also has a Hold rating.
• Oppenheimer maintained a $46 price target with a Hold rating.
• Piper Jaffray raised its price target from $54 to $67 in late April and raised its rating from Neutral to Overweight.

Michael Kors has posted a positive EPS surprise of at least 9% in each of the three prior quarters, but weakness from other high-end retailers like Nordstrom and Tiffany has dampened most investor enthusiasm for retail stocks, unless and until posted earnings absolutely hammer expectations.

Shares of Michael Kors traded up about 0.8% at $42.12 just after the lunch hour Tuesday. The stock’s 52-week range is $34.83 to $59.49. The consensus price estimate on the stock is $57.52.