Viking Global Bets On Apparel: Ralph Lauren Corp (RL), Coach, Inc. (COH), Express, Inc. (EXPR)

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Andreas HalvorsenViking Global, with $22.5 billion of assets under management, now owns over 10.6 million shares of Michael Kors Holdings Ltd (NYSE:KORS), or 5.3% of the apparel and accessory company’s outstanding shares. This is a jump of over 4.5 times the 2.27 million shares Viking owned at the end of the fourth quarter. Despite the stock being up 140% since its late-2011 IPO, I agree with Viking, there might still be room for this high-growth stock to go higher (check out Viking’s portfolio).

So why listen to Viking Global?

Viking Global, managed by Andreas Halvorsen, was one of the top 20, one billion-dollar or more, hedge funds of the first ten months of 2012, ranking seventeenth and having returned 19.4%. Halvorsen also one of Julian Robertson’s Tiger cubs and was a senior managing director at Tiger Management before starting the Viking Global hedge fund in 1999. From June 2005 to March 2010, Viking returned some 119% compared to the 11% for the MSCI World Index.

So why Kors?

Kors’ 4Q EPS came in at $0.64 per share, topping analysts’ estimates of $0.41, and same-store sales growth was robust across the board: 40% in North America and almost 60% in Europe. Margins were also on the rise, with the gross margin rising 80 basis points to over 60%, which only helps boost Kors’ impressive operating margin.

  • Michael Kors 28%
  • Ralph Lauren Corp (NYSE:RL16%
  • Express, Inc. (NYSE:EXPR12%
  • Coach, Inc. (NYSE:COH32%
  • Guess? 7%

So how are other retailers faring?

Some of the other major retailers include Ralph Lauren Corp (NYSE:RL), Coach, Inc. (NYSE:COH), Guess?, Inc. (NYSE:GES)  and Express, Inc. (NYSE:EXPR). Ralph Lauren has seen pressures due to the weakness in Europe, where over 35% of revenues are derived from international markets. As far as recent performance, Ralph Lauren posted EPS of $2.31, beating estimates of $2.18 on 2% higher same store sales and 4% higher total sales from the same quarter last year. The uptick in performance was mainly due to improvements in its U.S. markets.

Coach saw its total (addressable) women’s market in North America grow by 10% during December, but the company posted EPS that fell short of estimates, posting $1.23 compared to consensus of $1.28. This was driven by the $1.5 billion in revenue the company posted, versus $1.6 billion estimates. Part of Coach’s pressures involve its ties to the discretionary spending market, and as a result to consumers disposable income.

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