NEW YORK, NY--(Marketwire - Feb 1, 2013) - While the economy is gaining strength, its impact is clearly visible through the performance of luxury and high-end retail stocks. Michael Kors Holdings Limited made its debut in 2011 and since then the stock has gone from strength to strength, offering mouthwatering returns to its investors. Ralph Lauren Corp., though a mature company now, failed to perform well in the stock market in 2012. However, it has performed well into the New Year so far. Despite dismal performance shown by Coach, one of its frontrunners, luxury retail segment is poised to perform well in 2013.
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Michael Kors is one of the top performing lifestyle stocks. The company is scheduled to announce its third quarter earnings in February and it is expected to report 25 percent increase in its same store sales. Its EPS is also likely to grow by more than 45 percent. Michael Kors has been registering revenue growth surpassing its peers like Coach and Ralph Lauren. The company has also been successful in poaching market share from Coach in the U.S.
Michael Kors Holdings Limited's stock trades at Price/Earnings ratio of 44.55, which may seem exorbitantly high. However, since the stock is a high growth investment, it still has good upside left. The company is creating a niche for itself in the U.S. and is also planning for international expansion. With growing disposable income in Asia and other emerging economies, Michael Kors' stock is expected to rise further with its cross-border growth. The company has about 320 stores globally, out of which 250 stores are in the U.S., thus leaving a good scope for international growth. It is likely that Michael Kors will augment its store count by 50 in the current year. While the stock is likely to maintain its upward streak, it may need new catalyst to drive its stock up at the current pace.
Ralph Lauren is no longer a high growth story like Michael Kors. The company reported flat metrics for the first six months of fiscal 2012. It will be reporting its third quarter results on February 6. Ralph Lauren draws about 40 percent of its revenue from the markets outside of the United States, so it is likely to benefit from stabilizing economic situation in Europe and Asia.
Ralph Lauren's gross margin stands at 58 percent, which is pretty much in-line with its peers such as Tiffany and Michael Kors. However, the company's operating margin, which is at 15 percent, lags behind its competitors. The stock is also more reasonably priced as it currently trades at P/E ratio of 23.48 which is considerably lower than the ratios displayed by the likes of Kors. The stock also pays dividend, albeit its yield is low at barely 1 percent. Ralph Lauren also saw some insider selling in the form of the family offloading 12,500 shares late last year. However, the company fundamentals are good and its story is still on. Ralph Lauren also banks on overseas markets to fuel further growth.
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- Michael Kors
- Ralph Lauren
Michael Thomas Smith