Michael Kors Holdings Ltd (KORS): Earnings Have To Be “Fierce”

Michael Kors and his eponymous company, Michael Kors Holdings Ltd (NYSE:KORS) have a huge week ahead reporting earnings on Tuesday and the Fall 2013 Runway Show Live From Lincoln Center on Feb. 13. Michael Kors Holdings has been the retail Outperformer of 2012 and it only debuted in December 2011. The affordable luxury brand has beaten estimates since its IPO with “stunning” accelerating revenue growth, 74% in the last quarter, 58% in the quarter before that. This first earnings report after a full first year as a publicly traded stock will be widely watched as will the fashion show.

What Analysts Want (besides Runway Swag Bags)

Michael Kors Holdings, with its presence in 74 countries and a very strong showing in Asia, is expected to bring in at least $525-535 million in revenues and $0.37-39 diluted earnings per share as guided in the November earnings release. In the release the same store comps grew 41.3%, wholesale net sales grew 71%, and licensing revenues improved 31%. Fierce, indeed!

However, just as Michael Kors has been known to skewer a designer or two on Project Runway (they’re called Korsisms on the Project Runway site) analysts will be merciless about the entrance of competitor Coach, Inc. (NYSE:COH) into apparel and whether that’s a threat. Expect further questions about the torrid pace of expansion as the company opened another 66 stores last quarter for a total of 369 stores compared to 399 for rival Ralph Lauren Corp (NYSE:RL).

Analysts want to be sure all the seams are straight and the stray threads nipped off before they’re willing to stick their necks on the line and upgrade yet again. China, Hong Kong, and the health of the company’s relationship with Fossil, Inc. (NASDAQ:FOSL)which manufactures the popular Michael Kors watches will surely be raised during the Q&A.

The global lifestyle brands company trades at a luxe P/E of 45.39 with a forward P/E of 27.72 and has been the high end go to name for 2012 outshining names like Tiffany & Co. (NYSE:TIF), Saks Inc (NYSE:SKS), and Nordstrom, Inc. (NYSE:JWN). With a momentum name like Michael Kors Holdings earnings will have to be “fierce” and brilliant holiday sales are de rigeur. Ralph Lauren reported very good Q3 numbers last Tuesday on better than expected holiday sales and guided higher for 2013 taking their stock out of a six month slump. Ralph Lauren trades at almost half the P/E of Michael Kors Holdings at 23.35. It should be noted that when Michael Kors Holdings reported holiday sales a year ago they surprised by 122.20%.