Retail

After Earnings, Are Analysts Kicking Michael Kors While It's Down?

Chris Lange

Published: June 3, 2017 8:50 am

Last Updated: January 12, 2020 11:24 am

Michael Kors Holdings Ltd. (NYSE: KORS) watched its shares hit a multiyear low — near an all-time low — not seen since the days right after its initial public offering. This New York-based luxury fashion company has been the victim of an incredibly challenging retail environment, and it doesn’t seem like earnings helped out.

Analysts took this opportunity to send their price targets much lower, and so far none have come to the defense of Michael Kors. In fact, it actually seems like they are kicking the stock while it is down.

24/7 Wall St. has included some of the highlights from the earnings report, as well as what a few analysts are saying about this retailer after the fact.

The company said that it had $0.73 in earnings per share (EPS) and $1.06 billion in revenue. Consensus estimates from Thomson Reuters had called for $0.70 in EPS and revenue of $1.05 billion. The same period of last year reportedly had EPS of $0.98 and $1.20 billion in revenue.

Sales for stores open at least a year decreased 14.1%. On a constant currency basis, retail net sales grew 1.1% and comparable sales decreased 13.6%. Wholesale net sales decreased 22.8% to $456.1 million, and on a constant currency basis wholesale net sales decreased 22.3%. Licensing revenue decreased 6.2% to $33.4 million.

One of the biggest announcements in the quarter was that the company will close up to 125 stores, or about 13% of its total. The store-closing announcement basically pulls back on the rapid store expansion Michael Kors embarked on to challenge competitors such as Coach in suburban malls.

In terms of the outlook for the fiscal first quarter, the company expects EPS in the range of $0.60 to $0.64 and revenues of between $910 million and $930 million. The consensus estimates are $0.81 in EPS and $941.28 million in revenue for the quarter.

After these earnings came out, these analysts weighed in on Michael Kors:

• Goldman Sachs reiterated a Sell rating and lowered its price target to $35 from $44.
• Morgan Stanley reiterated an Equal Weight rating and lowered its price target to $36 from $43.
• Wells Fargo reiterated it at Market Perform and lowered its price target from $39 to $35.
• Piper Jaffray has a Hold rating with a $34 price target.
• Oppenheimer has a Hold rating and a $31 price target.
• BMO Capital Markets has a Hold rating and a $35 price target.
• Canaccord Genuity reiterated a Hold rating with a $33 price target.
• Telsey Advisory Group has a Market Perform rating and lowered its target to $38 from $42.
• Jefferies reiterated a Buy rating with a $60 price target.

Shares of Michael Kors were trading at $33.05 as Friday’s session came to a close, with a consensus analyst price target of $36.96 and in a 52-week range of $32.38 to $53.29.