It’s spring break again. So why not poke our divining rods into the suitcases of those students bound for their getaway playgrounds? What could be tucked within are some hot stock picks among premium fashion labels.
Ralph Lauren Corp (NYSE:RL) can easily be among our first finds. After all, this label ranks among the top 10 fashion brands most searched on the web search engine Bing in 2012, reports say. Moreover, the company had better-than-expected results for its fiscal 2012 third quarter. Propelled by a 6.5% sales gain in its retail segment during the period, Ralph Lauren Corp (NYSE:RL)’s revenue increased 2% to $1.8 billion, while operating income rose 13% to $304 million and earnings per diluted share were up 30% to $2.31.
With this year-to-date performance, the company projects that its full fiscal 2013 consolidated net revenues to increase by about 2%. This would be a deceleration from the 21% revenue growth in fiscal 2012, during which a $6.9 billion sales total was posted. For the fiscal 2013 fourth quarter, the company said it expects a mid-single-digit percentage increase in consolidated net revenues.
Ralph Lauren’s sales growth appears hobbled by store closures as the company repositions its greater China sales network and by the phasing out of the Rugby and American Living brands. The opening of new stores and Ralph Lauren’s e-commerce initiatives helped cushion the impact of the store shutdowns and the brand phase-outs, as well as partly deflected the negative impact of currency conversions.
Kors racks it up
If sales growth is solely to be the gauge for the best fashion label stock pick, Michael Kors Holdings Ltd (NYSE:KORS) sure has an inside track. It led Bing’s roster of the 10 most sea annkors rched fashion designers last year. For its third quarter, ended December 2012, the company’s total revenue rose 70.4% to $636.8 million. Gross income for the period amounted to $383.5 million, up 72.8% and represents 60.2% of total revenue, a further improvement from the 59.4% in the year-earlier quarter.
For the fiscal 2013 fourth quarter, the company sees total revenue of between $515 million and $525 million, assuming a low- to mid-20% comparable store sales increase. For its entire fiscal 2013, Michael Kors Holdings Ltd (NYSE:KORS) forecasts total revenue at about $2.1 billion, assuming that the gain in its comparable store sales hits a mid-30% clip.
Total revenue for Michael Kors fiscal 2012 rose 62.1% to $1.3 billion from $803.3 million posted in fiscal 2011. Fiscal 2012 gross profit increased 68.8% to $753.1 million, representing 57.8% of total revenue, higher than the 55.5% rise in fiscal 2011.
Ann Inc (NYSE:ANN)’s slip shows
Perusing ladies’ luggage bound for spring break will likely turn up Ann Taylor and LOFT brands, which are owned by Ann , a specialty retailer not only of women’s apparel but also shoes and accessories. Sales-wise though, Ann can’t match the double-digit growth of Michael Kors.
This ladies’ clothier recently revised guidance for its full fiscal 2012, projecting a 3% increase in sales to $2.376 billion for the year. With a gross margin rate expected at about 54.8%, the company, however, expects record earnings per share and double-digit net income growth. Ann Inc (NYSE:ANN)’s net sales for its fiscal 2012 fourth quarter are now projected to drop 1% to $608 million though.