William Blair Reaffirms Market Perform On Michael Kors Despite Strong Quarterly Earnings
Yesterday, Michael Kors (KORS) reported strong quarterly earnings, which surpassed street consensus. First-quarter EPS of $0.91 grew 48%, with the upside driven by wholesale and Europe. Total revenue increased 43.4%, to $919.2 million, driven by retail sales growth of 47.5%, wholesale growth of 40%, and licensing growth of 30.5%.
In reaction to the quarterly results, William Blair analyst Amy Noblin reaffirmed a Market Perform rating. No price target was provided.
Noblin wrote, “Despite another beat and raise, investors are concerned about the growing pressure on margins from both investment and now potentially the near-term normalization of gross margins as inventories outpace sales. While we still see numerous avenues for growth from distribution, product category expansion, and e-commerce, our recent downgrade was based on our concerns that 1-, 2-, and 3-year comp trends and wholesale growth are decelerating in the face of prudent but aggressive investment and normalizing margins. Thus, while we expect the beat-and-raise pattern to continue, we do not think top-line beats with declining margins will drive meaningful stock appreciation as investors contemplate long-term sustainable margins”.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amy Noblin has a total average return of -14.9% and a 25% success rate. Noblin is ranked #2964 out of 3203 analysts.
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