Consumer confidence is high in the United States, which is essential for purchasing luxury brands because consumers must feel secure about their purchases. How has this sentiment impacted luxury brands throughout 2014?
Michael Kors (NYSE: KORS) began 2014 on the right foot, beating analyst consensus for revenue and earnings per share in their quarterly report released in early February 2014. This strong streak lasted well into 2014. However, KORS’s most recent quarterly report, released on November 4th, posted earnings at the low end of analyst estimates and posted the smallest sales growth in 4 quarters.
Additionally, the luxury shoe and accessory company announced plans to relocate headquarters from Hong Kong to London. In 2015, Michael Kors fans can look forward to a new line of eyeglasses that Kors will be producing with Luxottica.
KORS has a 52-week high of $101.04 and a 52-week low of $68.25.
On December 29th, analyst Robert Ohmes of Bank of America/Merrill Lynch reiterated a Buy rating on KORS with a price target of $120. Ohmes noted that Kors had a success holiday shopping season, stating that traffic “appeared high at full-price and outlet stores” and that “Full-price and outlet stores were tightly packed with long check-out lines.” He continued, “KORS ‘innovative’ brand positioning gives the company the freedom to potentially become a dominant accessible luxury brand in multiple categories… as it targets the rapidly evolving, next generation of global consumers “
Robert Ohmes has a 71% overall success rate recommending stocks with a +9.3% average return per recommendation.
The general consensus for Michael Kors on TipRanks is Hold.
Kate Spade (NYSE: KATE) got many mixed reviews this year. However, KATE gave Michael Kors a run for their money in the second quarter when the company posted almost 50% year-over-year increase in net sales the second quarter of the year, which was released in August. Many were pleased with Kate’s third quarter report, which was released in early November. The report posted adjusted earnings per share that broke even, an increase from last year’s loss of 8 cents per share.
Earlier this year in February, Kate Spade completed the acquisition of Globalluxe, in which the $34 million transaction gave Kate Spade ownership over of the Kate Spade businesses in Asia. These newly acquired locations will be owned both directly and indirectly by Kate Spade.
KATE has a 52-week high of $42.87 and a 52-week low of $24.07.
On November 6th, analyst Ike Boruchow of Sterne Agee reiterated a Buy rating on KATE with a price target of $38. Boruchow was optimistic after the Q3 report was released, noting that the company “beat on both comps and GMs despite investor angst that the business was headed in the wrong direction.” He continued, “The 2016 margin overhang was also removed, as their ~20% target was revised to 18-20% – better than most had feared and still representing material expansion from this year’s ~13%. Comps and margins are solid, the stock should re-rate.”
Boruchow has a 77% overall success rate recommending stocks with a +17.5% average return per recommendation.
The general consensus for Kate Spade on TipRanks is Moderate Buy.
Coach (NYSE: COH) has not had the best year, having seen a continuous decrease in sales over the past 5 consecutive quarters. In addition, the luxury retailer had to close 70 stores this year as sales growth slowed.
However, there has been recent speculation that LVMH Moet Hennessy Louis Vuitton (LVMUY) has plans to acquire Coach, causing Coach shares to surge over the past few days. It is rumored that Louis Vuitton likes the effort Coach has made to turnaround and move from selling classical high-end luxury accessories to ready-to-wear apparel.
COH has a 52-week high of $56.72 and a 52-week low of $32.72.
Coach was last rated on December 10th by UBS analyst Michael Binetti, who reiterated a Neutral rating on the stock with a $34 price target. He noted, “Our Proprietary Work Suggests a Longer Path to Recovery for Coach.” The analyst listed multiple challenges to Coach’s turnaround efforts: “1) a demographic disadvantage relative to peers (lower income consumer… $95k avg income vs Kors: $104k, older customer at 38 y/o on avg vs Kors: 35); 2) Concerning future purchase intent (for every brand except COH, the % of consumers who plan to buy the brand over the next yr is significantly higher than the % of consumers who bought the brand over the past yr); 3) a damaged value equation (70% of COH owners “almost never buy at full price” vs Kors/Kate/Tory: 60-62%).”
In the past year, Binetti has successfully made 38 ratings out of 42 total, earning a 90% success rate recommending stocks and a +21.8% average return per recommendation.
The general consensus for COH on TipRanks is Hold.
Tiffany & Co.:
Tiffany’s (NYSE: TIF) long-term growth outlook is promising given its new product launches and focus on opening more retail locations throughout the world. However, a decrease in demand throughout Japan and Europe has put added pressure on the company. With that said Tiffany’s remains adamant that Europe still holds strong growth opportunities.
Japan’s economy has continued to struggle this year, with the impact of a consumption tax jump from 5% to 8% this past April. Tiffany’s still remains optimistic about the Japanese economy and believe there is still room for substantial growth.
TIF has a 52-week high of $110.60 and a 52-week low of $80.38.
Tiffany’s was rated on November 26th by Morgan Stanley analyst Kimberly Greenberger, who maintained an Equal-Weight rating on the stock with a $103 price target. She reasoned that Tiffany’s recently launched an in-house brand called Tiffany T collection that could ultimately help profits and back their current share price, however Greenberger “prefer[s] to buy on the dips.”
In the past year, Greenberger has successfully made 36 ratings out of 57 total, earning a 63% success rate recommending stocks and a +13.7% average return per recommendation.
The general consensus for TIF on TipRanks is Hold.