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News Breaks
August 4, 2014
13:25 EDTRL, KORS, COH, KATEMichael Kors retreats after reporting margin decline
Shares of luxury accessories maker Michael Kors (KORS) are falling after the company reported stronger than expected results for the first quarter of its fiscal 2015, but said that its gross margins had dropped during the quarter. The company also estimated that its gross margin would drop in fiscal 2015. Analysts were divided on the company's outlook following the results. WHAT'S NEW: Michael Kors reported first quarter earnings per share of 91c, compared with analysts' consensus estimate of 81c. The company's revenue came in nearly $70M above expectations at $919.2M. However, Michael Kors' retail operating margin fell to 29.7% last quarter from 31.7% during the same period a year earlier, partially due to increased discounts. The company warned that its retail gross margin would likely decline about half a percentage point this year. On a positive note, the accessories designer provided fiscal 2015 EPS guidance of $4.00-$4.05, versus analysts' consensus estimate of $3.96. ANALYST REACTION: In a note to investors earlier today, Sterne Agee analyst Ike Boruchow wrote that "red flags abound" for the company. Specifically, Michael Kors' gross margins look poised to come under pressure as its spending is accelerating, the analyst warned. Meanwhile, the company's inventories were "heavy," and its first Fall products were not well-received by customers, the analyst stated. Although it remains to be seen if the red flags will become a "tipping point" for Michael Kors' profitability, investors should stay on the sidelines on the name until the outcome becomes more certain, advised Boruchow, who lowered his price target on the shares to $85 from $92 and kept a Neutral rating on the stock. Conversely, Bank of America Merrill Lynch analyst Robert Ohmes wrote that the "impressive momentum" of Michael Kors should continue, partly due to its expected launch of new products for men this fall, its "impressive" growth in Europe, its launch of 100 new footwear shops, and strong licensing revenue. He expects the company's results to continue beating expectations and said that today's pullback in the stock has created a buying opportunity. OTHERS TO WATCH: Michael Kors' competitors include Coach (COH), Kate Spade (KATE) and Ralph Lauren (RL). PRICE ACTION: In mid-afternoon trading, Michael Kors slumped 6.6% to $76.42.
News For KORS;COH;KATE;RL From The Last 14 Days
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September 30, 2014
06:07 EDTKORSMichael Kors implied volatility of 27 at lower end of index mean range
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September 25, 2014
17:42 EDTCOHCoach executive chairman Lew Frankfort to retire
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September 23, 2014
08:40 EDTKORSMichael Kors attractive vs. peers, says BofA/Merrill
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September 17, 2014
10:00 EDTKATEOn The Fly: Analyst Initiation Summary
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07:17 EDTKATEKate Spade initiated with a Buy at Wunderlich
Target $36.

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