What to Expect From Michael Kors Holdings Ltd (KORS)

The bottom line
Kors has a lot of things going for it, with rapid revenue growth of more than 70% in the first half of its fiscal year and long-term plans to expand its store footprint from 270 locations up to 600 stores. But all that growth comes at a premium, and means that investors are betting on no potholes along the road. The earnings release next week will be especially telling, as it will show what kind of company Kors is when the economy isn’t pumping along.

In the past, I’ve made the mistake of worrying too much about the secondary goals of companies — what their Asian expansion looked like, how that new line of clothes was doing, etc. — and I’ve lost focus on the core business. For Michael Kors, I want to see that the holidays came with strong sales in its $300 handbags and logo merchandise. That’s the company’s bread and butter, and it needs to get that right to keep growing.

Having said that, I suspect Kors will come in line with expectations or slightly above. The company had positive surprises on all of its 2012 quarters, and while the consensus earnings per share estimate for this release is $0.40, I wouldn’t be surprised to see closer to $0.45. Regardless of how it turns out, we’re going to learn a lot about how Kors handles pressure next week.

The article What to Expect From Michael Kors originally appeared on Fool.com and is written by Andrew Marder.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Coach and Fossil. The Motley Fool owns shares of Coach and Fossil.

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