What does the future hold for Michael Kors Holdings (KORS)? The consensus appears to be that things look tepid in the near term but could be stellar in the future. Add JPMorgan's Matthew Boss to the roster of folks who peeked into their crystal balls and see a solid outlook for Michael Kors.
Michael Kors Boss acknowledges the current headwinds, but still sees good times ahead. He explains why:
Against today's choppy backdrop, Kors' top-line roadmap remains a growth outlier with $7-$8 billion reasonable by fiscal 2018 (with Europe/Asia growth bigger than North America), but the drivers are in transition with multi-year growth investments on tap (with fiscal 2015 not the investment peak from a modeling perspective) and lower margin footwear and apparel becoming larger pieces of the pie (lifestyle rather than handbag brand) sending EBIT margins south (26%-27% sustainable by our math).
Boss also remains confident that a return to solid growth awaits Kors:
Driving growth, management was very upbeat on Europe traction, citing about 60% trailing twelve months growth with the ability to more than triple its revenue base over time (with the $1.5 billion goal reasonable by fiscal 2017 on our math versus $500 million today) given expanded retail presence (200 stores versus 80 today) and wholesale (2,000 doors from 1,344 current).
Investors have been adding Kors to their closets this afternoon. Its shares have gained 1% to $72.10.
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