The management team is making Europe the focus for growth this year. In the USA they deal with two or three huge commercial property groups (Simon Property is the best client) and it is easy for them to strike deals to open stores. In Europe the machinations for store openings are quite different. They may be dealing with a family, or private owners for a good spot on a busy street.
The brand awareness in Europe is increasing every quarter. If you look at Google trends "regions" you will see that some portions of Europe are as strong as North America. My checks on social media indicate a strong presence this quarter from the UK, Italy, France, Netherlands, and many other European countries.
I am interested in their revenue growth in Europe for this quarter, and believe it is the "next frontier" for KORS.
KORS retraced some of its losses as it rose $3.08 (4%) with nearly 17 million shares being exchanged this week. The previous two weeks KORS sold off $5.48 with nearly 43 million shares traded in the two week time frame for a weekly average around 21.5 million shares. The stock is just beneath its 50DMA as it closed at $80.07, and has some work to do in order to get in the good graces of technical traders.
The buy volume has been coming in strong in the mid-day the past few days. There were many who thought KORS under the 50DMA was a good short, and now they are trapped. 12 million shares short ahead of strong earnings is not a desirable position...
From Q3 2013:
In Europe, the 58% comparable store sales growth, which reflected continued brand acceptance, combined with the expansion of our retail and wholesale doors, led to 112% sales growth in the quarter. Finally, in our licensing segment, revenue increased 52%, driven primarily by the ongoing strength in watches. Overall, we believe that the Michael Kors brand is ideally positioned within the global luxury lifestyle market and we look forward to delivering on our long-term objectives.”
In Europe, sales nearly doubled during the quarter, with continued expansion of brand awareness leading to 63% comparable store sales growth.
In Europe, sales grew 144% in the first quarter, as growing brand awareness led to comparable store sales growth of 56%
In Europe, sales grew 101% in the second quarter, as brand awareness continued to drive comparable store sales growth of 45%. The year 2014 will be the "Year of Europe."
They cannot open stores fast enough there. Watch for the revenues and margins from Europe this quarter. It is their next region of domination.
I expect huge sales from Europe this quarter. Michael Kors personally opened two stores in Milan this past quarter with celebrity parties. His products are resonating with the fashion forward European women.
I observed the same thing at four or five different Michael Kors retail locations in California. KORS is eating COH's lunch. This was a big quarter for KORS...
The COH conference call was a disaster. Their leadership team is grasping for anything. They claim the luxury handbag market is robust, but Coach is complaining about slower traffic. Hello...
NKE growing at 15% with a multiple of 25. KORS growing at 50% with a multiple of 32. I would argue NKE is the more "expensive" stock, and losing share to Under Armour....
I expect KORS to trade over $120 this year, and it looks like it will get a jump start in February.
A $1 quarter will take it over $90...
Recently, you posted that KORS will deliver $1 in EPS for this quarter. I thought you were being too optimistic about the expectations from managment, amd countered with a $.92 for Q3 2014!
However, after listening to the COH conference call; you may be closer than I originally thought.
We may be looking at accelerating EPS and revenue growth up for this quarter? That would really fry the shorts who have been emboldened by the technical aspect of the KORS break below $80!
There are two ways to look at the bad COH numbers.
1. The handbag market in the USA is shrinking, and their numbers are a reflecting of that shrinking market.
2. The competition is becoming stiffer, and we are suffering in the USA as a result of the increased competition.
Since the CEO specifically pointed to Michael KORS as the culprit who is taking market share. I will go with number 2!
Wow! I did not hear Jim Cramer say that. Does this mean their dividend is at risk of being cut too? I do not think COH is in the same place as JC Penney? I could be wrong. The same store sales numbers are scary.
The fashion business is fickle, and Michael Kors will not be in " vogue" forever. But,they are trending nicely, and a wise investor will take advantage of the trend.