Professional Documents
Culture Documents
KORS Equity Research Report
KORS Equity Research Report
22 Oct 2015
Investment Summary
OUTPERFORM*
39.46
51.50
38.06
-
78.59
8,234.0
M
7,816.7
M
$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$0.00
Gross
Margin
EBIT
Margin
Net
Income
Margin
FY12A
59.9%
28.9%
18.2%
FY13A
60.9%
30.5%
20.0%
FY14A
60.6%
28.8%
20.2%
Gross
Margin
EBIT
Margin
Net
Income
Margin
FY15E
58.9%
35.0%
22.8%
FY16E
58.9%
34.1%
22.9%
FY17E
58.9%
32.5%
22.4%
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Main
Operations
Michael
Kors
Holdings
Limited
is
a
global
accessory,
footwear,
and
apparel
company
based
in
New
York
City.
The
company
incorporated
in
2002
and
has
since
continued
to
have
an
important
share
of
their
market.
Kors
Holdings
operates
within
three
distinct
segments
of
the
market;
retail,
wholesale,
and
licensing.
Within
the
product
line
itself;
the
largest
contingent
driving
revenues
is
retail
outlets,
followed
very
closely
behind
the
wholesale
market.
For
the
totality
of
generated
revenues,
the
retail
market
consisted
of
48.83%,
wholesale
accounted
for
47.24%,
and
licensing
3.93%.
The
firm
operates
currently
in
around
100
countries
and
operates
in
company-operated
retail
stores,
leading
department
stores,
specialty
stores
and
select
licensing
partners.
The
primary
market
is
North
America,
however
given
the
recent
investments
in
Europe
and
Japan,
an
increasing
emphasis
has
been
placed
on
growing
market
share
in
these
areas.
For
instance,
in
the
last
quarter,
revenue
increased
in
Europe
by
42%
and
57%
in
Japan.
The
breadth
of
products
produced
is
extensive,
but
as
is
expected
for
the
particular
market
in
which
this
firm
operates.
The
firms
product
line
includes
both
men
and
womens
wear,
and
produces
products
such
as
eyewear,
footwear,
handbags,
fragrances,
watches,
and
apparel,
among
others.
The
two
primary
collections
are
the
Michael
Kors
luxury
collection,
and
the
MICHAEL
Michael
Kors
accessible
luxury
collection.
The
accessible
collection
focuses
primarily
on
accessories,
but
both
collections
are
available
through
most
retail
outlets.
The
largest
and
most
renowned
retail
outlets
in
which
Kors
sells
its
goods
are
Saks
Fifth
Avenue,
Nordstrom,
Bloomingdales,
Macys,
among
others.
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Business
Risks
There
is
no
current
litigation
again
the
firm,
however,
it
did
just
settle
a
class-action
lawsuit
for
$4.8
million
dollars.
The
litigation
brought
against
the
firm
claimed
that
the
price
tags
used
for
the
merchandise
in
retail
outlets
were
deceptive
to
the
consumers.
The
firm
wished
to
settle
rather
than
continue
with
litigation,
furthering
the
costs
effected
by
this
case.
The
$4.8
million
dollars,
however,
is
not
a
significant
amount
of
funds
comparatively
to
their
overall
operations
(LaFreniere,
2015).
The
biggest
risk
to
the
firm
is
the
fluctuation
of
currency,
given
the
relative
size
of
the
North
American
market.
When
the
U.S.
market
has
a
particularly
strong
correlation
to
that
of
the
Euro
or
Yen,
then
tourists
visiting
will
be
more
reluctant
to
purchase.
The
effect
showed
greatest
in
the
first
quarter
of
2015,
when
the
firm
posted
its
first
sales
loss
in
the
companys
history.
With
the
announcement
of
the
loss,
shares
fell
24%
to
$45.93
(Kapner,
2015).
Because
of
the
overall
effect
the
exchange
rates
had,
this
could
be
seen
as
the
largest
risk
facing
the
company.
Another
risk
facing
the
firm
is
the
rate
at
which
expansion
occurred.
The
company
is
relatively
new
to
operating
at
such
as
size
in
so
many
retailers
that
it
may
be
difficult
to
maintain
its
brand
image
and
financial
performance.
As
long
as
improvements
to
the
Management
Information
Systems,
logistics,
product
development,
and
distribution
increases
accordingly,
then
current
financial
projections
should
remain
intact.
Revenue
Drivers
The
largest
revenue
drivers
from
both
the
SWOT
analysis
and
from
recent
financial
earnings
indicate,
is
the
expanded
footprint
of
retail
outlets
globally,
as
well
as
a
push
to
increase
the
direct-to-user
abilities
of
the
online
market.
An
additional
fifteen
retail
outlets
opened
worldwide,
up
from
85
to
100.
License
revenues
also
increased
due
to
the
related
sales
of
eyewear,
footwear,
and
jewelry.
Expense
Drivers
and
Gross
Margin
The
largest
expense
driver
is
the
expansion
of
operations
in
both
Europe
and
Japan.
This
has
maintained
a
sales
growth
throughout
the
previous
five
years.
While
the
sales
growth
has
slowed,
so
too
has
the
selling,
general,
and
administration
costs.
These
costs
are
typically
one
of
the
largest
costs
associated
with
net
income,
so
having
the
ability
to
decrease
those
expenses
while
overall
sales
has
slowed
is
key
to
maintaining
retained
earnings.
The
latest
gross
margin
calculated
showed
a
57.40%
margin,
and
has
been
stable
around
this
percentage
for
the
last
few
years
averaging
55.80%
for
the
last
five
years.
Both
gross
margin
percentages
are
higher
than
the
industry
average,
which
shows
that
the
firm
has
been
able
to
keep
costs
down
despite
the
recent
expansions
in
Europe
and
Japan.
The
gross
margin
is
also
in
line
with
the
other
performance
standards
exhibited
by
the
firm,
in
that
their
margin
is
higher
than
most
competitors,
or
the
highest
in
the
industry.
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
SWOT
Analysis
Strengths:
Weaknesses:
Unique
product
line
with
exclusive
designs
Expansion
of
online
sales
in
US
and
foreign
markets
may
undermine
retail
sales
High
quality
products
allow
positive
pricing
revenue
power
Lack
of
market
exposure
in
foreign
Strong
branding
allows
continued
support
markets
in
comparison
to
other
of
quality
image
competitors
High
customer
loyalty
from
repetitive
Over-saturation
of
items
lower
luxury
purchases
due
to
high
satisfaction
factor
Opportunities:
Threats:
Emerging
international
interest
in
luxury
Changes
in
trends
for
luxury
goods
American
apparel
makes
foreign
markets
Significant
competition
among
rival
brands
lucrative
Shifts
in
demographics
and
lifestyle
Company
sector
organization
allows
changes
management
to
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Recent
Financial
Performance:
Units
$
Millions
%
Historical
FY10A
FY11A
FY12A
FY13A
FY14A
$
803 $
1,302 $
2,182 $
3,311 $
4,371
58.1%
62.1%
67.5%
51.8%
32.0%
Cost
of
Sales:
Gross
Profit:
Gross
margin:
$
Millions
$
Millions
%
Operating
Expenses:
Selling,
General
and
Administrative:
Depreciation
and
Amortization:
Total
Operating
Expenses:
$
Millions
$
Millions
$
Millions
$
Millions
%
Other
Income/Expense:
Interest
and
Investment
Income:
Interest
Expense:
Total
Other
Income/Expense:
$
Millions
$
Millions
$
Millions
-
-
-
-
-
(2)
(2)
(2)
(0)
(0)
(2)
(2)
(2)
(0)
(0)
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
-
(2)
-
137
-
(4)
$
Millions
$
Millions
$
Millions
%
$
Millions
$
Millions
16
21
-
-
-
57
126
398
662
881
$
Millions
$
as
Stated
$
Millions
$
as
Stated
141
$
0.40
179
$
0.40
EBITDA:
EBITDA
Margin:
$
Millions
%
Income
Statement
Net
Sales:
Revenue
growth:
-
3
-
252
-
(3)
158
$
0.80
189
$
0.78
-
(1)
-
628
-
(1)
197
$
2.02
202
$
1.97
-
(0)
-
1,009
-
(1)
203
$
3.27
206
$
3.22
-
(3)
2
1,257
-
(1)
203
$
4.35
206
$
4.28
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
FY10A
FY11A
FY12A
Historical
FY13A
FY14A
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
21
80
117
20
238
$
106
127
187
32
453
$
473
206
267
35
981
$
971
298
427
50
1,747
$
979
363
520
127
1,990
Non-Current
Assets:
Net
Property
and
Equipment:
Other
Intangibles
&
Goodwill:
Deferred
Tax
Assets:
Other
Non-Current
Assets:
Total
Non-Current
Assets:
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
119
30
9
3
161
171
28
15
8
222
242
35
13
19
309
351
62
34
23
470
563
76
30
33
702
Total Assets:
$ Millions
399
674
1,290
2,217
2,692
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
13
53
43
19
128
23
67
67
8
165
-
83
72
9
164
-
144
117
47
308
-
143
158
26
326
Non-Current
Liabilities:
Long-Term
Debts:
Other
Long-Term
Liabilities:
Deferred
Taxes
Liabilities:
Total
Non-Current
Liabilities:
$
Millions
$
Millions
$
Millions
$
Millions
102
39
5
146
-
47
6
53
-
65
13
78
-
97
6
102
-
110
14
125
Total Liabilities:
$ Millions
274
218
242
411
451
STOCKHOLDERS'
EQUITY
Common
Stock
&
APIC:
Retained
Earnings:
Accumulated
Other
Comprehensive
(Loss)
Income:
Treasury
Stock:
$
Millions
$
Millions
$
Millions
$
Millions
40
228
424
81
229
626
4
(1)
(4)
-
-
-
527
1,288
(6)
(2)
637
2,169
(67)
(498)
$ Millions
125
456
1,047
1,806
2,241
$ Millions
399
674
1,290
2,217
2,692
Balance
Sheet
ASSETS
Current
Assets:
Cash
and
Cash
Equivalents:
Accounts
Receivable:
Inventories:
Prepaid
Expenses
&
Other
Current
Assets:
Total
Current
Assets:
Units
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
FY10A
FY11A
FY12A
Historical
FY13A
FY14A
$ Millions
73
147
398
661
881
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
26
0
-
4
-
-
-
17
38
0
-
3
28
(32)
-
(6)
54
1
0
1
21
(145)
-
8
80
1
4
1
29
(55)
(0)
(21)
138
1
2
1
49
(45)
(0)
15
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
(14)
(51)
(9)
18
37
10
(1)
110
(48)
(71)
(13)
15
46
10
(2)
115
(73)
(81)
(4)
18
151
15
0
364
(104)
(158)
(5)
56
124
25
(4)
633
(83)
(112)
(20)
6
22
10
(6)
858
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
(57)
(88)
(1)
-
-
-
-
-
(58)
(88)
(121)
(9)
(3)
(6)
(139)
(185)
(29)
(2)
-
(216)
(356)
(29)
(3)
-
(388)
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
$
Millions
195
-
(230)
(2)
-
-
-
-
(0)
(38)
111
-
(101)
-
10
-
10
-
30
59
16
-
(39)
-
30
-
-
-
143
151
21
-
(21)
-
19
(2)
-
-
55
71
-
-
-
-
15
(495)
-
-
45
(435)
$ Millions
$
Millions
$
Millions
$
Millions
15
85
374
484
8
21
106
473
971
106
480
956
979
Units
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Industry
Overview
Overview
&
direct/indirect
competitors
&
market
shares
In
contrast,
indirect
competitors
of
Michael
Kors
would
include
such
businesses
such
as
Amazon,
as
Amazon
sells
directly
to
the
consumer,
yet,
reduces
the
revenues
generated
through
selling
to
consumer
within
retail
outlets.
Another
indirect
competitor
would
be
the
market
for
imitation
Michael
Kors
products.
Particularly
in
countries
such
as
China,
the
demand
for
luxury
goods
is
prevalent,
however,
many
consumers
are
not
willing
to
pay
the
luxury
prices
for
the
merchandise.
Instead,
certain
consumers
will
instead
purchase
imitation
goods
that
resemble
the
actual
product,
thus
decreasing
overall
sales.
Recent
Trends
&
Explanations
The
current
downturn
in
accessory
sales
exhibited
by
Michael
Kors
can
be
attributed
to
a
number
of
causes,
primarily
the
lack
of
recent
unique
design
and
the
loss
of
luxury
factor
by
failing
to
maintain
pricing
power.
Despite
this
downturn,
Kors
strong
brand
relevance
and
clear
loyalty
among
customers
suggests
that
the
dip
will
only
be
temporary
as
market
adjust
to
changing
design
trends.
During
this
downturn
in
accessory
sales,
one
might
assume
that
demand
for
Michael
Kors
product
line
has
diminished.
This
turns
out
to
be
false
after
examining
the
correlation
found
between
luxury
accessories
and
luxury
footwear.
During
the
recent
decline
which
we
claim
to
be
caused
by
over-
saturation
of
the
market,
we
can
assume
that
disposable
income
for
most
individuals
in
the
luxury
goods
market
had
no
decreased.
Due
to
brand
equity
and
a
loyal
consumer
base,
demand
for
the
Michael
Kors
product
line
had
not
diminished
it
has
simply
shifted
towards
its
footwear.
This
makes
sense
due
to
the
correlation
of
-0.71
between
decreases
in
accessories
and
increases
in
footwear.
This
is
advantageous
for
Kors
due
to
their
ability
to
still
maintain
steady
consumer
demand
despite
fluctuations
in
market
trends.
Although
the
drop
in
accessories
sales
is
slightly
offset
by
the
negative
correlation
with
footwear,
due
to
distribution
in
sales
for
Michael
Kors
the
increase
in
footwear
merely
served
to
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
offset
the
loss.
Michael
Kors
competes
against
other
luxury
firms,
such
as
Coach.
Large
luxury
retailers
often
overprice
their
goods
in
order
to
avoid
oversaturation
of
their
brand
amongst
the
industry.
This
typically
leads
an
inverse
effect
that
increases
demand.
Lowering
prices
below
competition
under
normal
conditions
allows
shifts
in
sales
to
increase
in
the
short
run,
but
negative
effects
of
brand
oversaturation
pose
larger
threats
to
future
revenues.
Surprisingly,
most
other
online
and
small
retailers
fail
to
have
a
substantial
effect
on
Michael
Kors
due
to
its
already
established
and
respected
brand
name.
Michael
Kors
has
made
their
luxury
products
more
convenient
to
their
customers
by
expanding
their
online
presence
on
domestic
and
international
levels.
Despite
additional
advertisement
campaigns
to
increase
consumer
loyalty,
faulty
design
or
shifts
in
trends
could
equate
to
large
migrations
to
more
fashionable
brands.
Possible
sales
promotions
that
lower
purchase
price
could
also
give
advantages,
as
long
as
the
promotions
do
not
diminish
the
value
of
their
brand.
Ultimately,
Michael
Kors
must
continually
innovate
to
ensure
its
competitive
advantages
in
the
luxury
market
if
it
wishes
to
stay
a
strong
competitor.
Bargaining
Power
of
Buyers
(Moderate)
When
demand
for
luxury
products
increases,
bargaining
power
for
buyers
will
decrease.
Although
recent
sales
decline
in
accessories
for
Michael
Kors
has
indicated
lower
demand,
this
can
be
explained
in
Kors
introduction
to
lower
priced
items
leading
to
lower
brand
equity.
This
can
easily
be
corrected
with
changes
to
price
or
development
of
a
new
product
line,
increasing
demand
once
more.
Since
Michael
Kors
expansion
into
global
and
online
markets
has
increased
availability
to
regions
otherwise
unable
to
purchase
luxury
goods,
there
has
been
significant
increases
in
demand
due
to
low
market
saturation
and
its
high
brand
equity.
Thus,
there
would
be
a
moderate
increase
in
buying
power
of
consumers
in
the
United
States
until
changes
are
made
to
improve
demand.
Bargaining
Power
of
Suppliers
(Weak)
Given
the
size
and
market
share
of
Michael
Kors,
suppliers
are
inclined
to
bid
for
exclusive
deals.
This
is
very
advantageous
for
Michael
Kors
as
they
can
accept
bids
which
ultimately
leads
to
lower
production
costs
and
higher
profits.
Due
to
the
well
managed
and
structured
logistic
aspect
in
Kors
wholesale
sector,
distribution
of
products
has
always
been
able
to
keep
up
with
demand.
This
gives
Michael
Kors
a
great
position
with
the
bargaining
power
of
suppliers.
Threat
of
Substitutes
(Weak)
Michael
Kors
remains
one
of
the
top
3
leading
manufacturers
of
luxury
goods
due
to
its
brand
equity
and
consumer
loyalty.
Substitutes
that
provide
cheaper
alternatives
and
similar
style
to
popular
luxury
items
typically
lack
in
quality.
Effects
from
this
shifting
consumer
base
would
result
in
somewhat
lowered
sales,
but
would
not
be
hindered
long
term
due
to
the
lesser
asset
lifetime
and
the
need
for
a
more
durable
and
luxurious
product.
Michael
Kors
has
already
established
high
quality
production
facilities
which
would
be
difficult
to
imitate
by
other
substitutes
due
to
significant
initial
capital
requirements.
This
in
addition
to
the
appeal
of
the
Michael
Kors
branded
design
make
threats
of
substitution
minimal.
10
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Threat
of
New
Entrants
(Moderate)
As
with
the
threat
of
substitutes
above,
we
observe
a
similar
barrier
in
capital
requirements.
New
entrants
into
the
luxury
goods
market
would
almost
exclusively
be
limited
to
only
companies
that
had
significant
funding
in
addition
to
a
desirable
design
scheme.
Such
companies
might
manifest
and
become
successful
at
low
market
exposure,
but
would
never
be
able
to
compete
with
the
already
established
brand
equity
of
Michael
Kors
at
significant
market
share.
Although
Michael
Kors
is
currently
expanding
into
more
foreign
markets
aided
by
significant
advertisement,
possible
cultural
preferences
of
the
area
might
discourage
consumer
loyalty
and
allow
for
native
designers
to
trump
Kors.
The
chances
of
this
happening
dont
seem
likely
with
increased
sales
in
most
foreign
markets
for
the
most
recent
year,
which
makes
threats
of
new
entrants
unlikely.
11
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
12/31/2015E
EV
/
Revenue:
12/31/2016E
EV
/
Revenue:
LTM
EV
/
EBITDA:
12/31/2015E
EV
/
EBITDA:
12/31/2016E
EV
/
EBITDA:
25th to Mean
LTM Reported P / E:
Mean to 75th
12/31/2015E
Reported
P
/
E:
12/31/2016E
Reported
P
/
E:
Multiple
Method:
Terminal
EBITDA
of
3.0
-
5.0
x:
$50.00
$100.00
$150.00
$200.00
$250.00
12
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Financial
Projections:
Income
Statement
Net
Sales:
Revenue
growth:
Projected
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
$
7,278 $
9,323 $
11,466 $
13,730 $
15,752 $
17,172 $
18,556 $
19,650
66.5%
28.1%
23.0%
19.7%
14.7%
9.0%
8.1%
5.9%
Cost
of
Sales:
Gross
Profit:
Gross
margin:
Operating
Expenses:
Selling,
General
and
Administrative:
Depreciation
and
Amortization:
Total
Operating
Expenses:
Other
Income/Expense:
Interest
and
Investment
Income:
Interest
Expense:
Total
Other
Income/Expense:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,034
-
-
-
-
-
-
-
-
-
-
1,334
1,731
2,147
2,588
3,086
3,370
3,648
3,867
EBITDA:
EBITDA
Margin:
-
-
-
2,639
-
-
-
-
-
3,273
-
-
-
-
-
3,946
-
-
-
-
-
4,704
-
-
-
-
-
5,138
-
-
-
-
-
5,561
-
-
-
-
-
5,894
-
-
Revenue
is
divided
by
segments
and
projected
based
on
Numbers
of
Stores
and
Average
Sales
per
Stores.
Stores
can
be
further
divided
into
Retail
and
Outlet
stores.
We
assume
the
number
of
new
Retail
stores
open
for
the
next
4
year
is
400,
and
then
decreases
as
new
stores
will
no
longer
be
more
profitable
or
cannibalize
other
stores.
New
Outlet
stores
grow
moderately.
In
the
Base
Case,
we
assume
the
abnormal
growth
disappear
around
year
7
due
to
brand
saturation.
CapEx
grows
aggressively
for
the
next
4
years
due
to
more
open
stores
and
then
decreases.
SG&A
as
%
of
Revenue
stay
flat/slightly
decreases.
13
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Balance
Sheet
ASSETS
Current
Assets:
Cash
and
Cash
Equivalents:
Accounts
Receivable:
Inventories:
Prepaid
Expenses
&
Other
Current
Assets:
Total
Current
Assets:
Projected
FY18E
FY19E
FY15E
FY16E
FY17E
FY20E
FY21E
FY22E
$
1,749
560
806
117
3,233
$
2,639
718
1,033
148
4,538
$
3,550
883
1,270
181
5,884
$
4,301
1,057
1,521
215
7,094
$
5,209
1,212
1,745
237
8,405
$
6,067
1,322
1,903
258
9,550
$
6,698
1,428
2,056
279
10,461
$
7,279
1,513
2,177
295
11,264
Non-Current
Assets:
Net
Property
and
Equipment:
Other
Intangibles
&
Goodwill:
Deferred
Tax
Assets:
Other
Non-Current
Assets:
Total
Non-Current
Assets:
952
76
30
43
1,101
1,601
76
30
53
1,760
2,643
76
30
64
2,813
4,281
76
30
76
4,463
6,275
76
30
89
6,469
8,696
76
30
96
8,899
11,632
76
30
104
11,841
14,874
76
30
109
15,089
Total Assets:
4,333
6,298
8,696
11,557
14,874
18,448
22,303
26,353
-
273
224
35
532
-
350
283
45
679
-
431
345
56
832
-
516
411
68
994
-
592
454
81
1,126
-
645
494
88
1,227
-
697
533
96
1,325
-
738
564
101
1,403
Non-Current
Liabilities:
Long-Term
Debts:
Other
Long-Term
Liabilities:
Deferred
Taxes
Liabilities:
Total
Non-Current
Liabilities:
-
182
14
197
-
231
14
245
-
282
14
296
-
335
14
349
-
370
14
384
-
403
14
417
-
434
14
449
-
460
14
474
Total Liabilities:
728
924
1,128
1,344
1,511
1,644
1,774
1,877
STOCKHOLDERS'
EQUITY
Common
Stock
&
APIC:
Retained
Earnings:
Accumulated
Other
Comprehensive
(Loss)
Income:
Treasury
Stock:
712
3,503
(112)
(498)
808
5,234
(170)
(498)
926
7,381
(241)
(498)
1,068
9,969
(326)
(498)
1,230
13,055
(424)
(498)
1,407
16,425
(530)
(498)
1,598
20,073
(645)
(498)
1,801
23,940
(767)
(498)
3,605
5,374
7,568
10,213
13,363
16,804
20,529
24,476
4,333
6,298
8,696
11,557
14,874
18,448
22,303
26,353
14
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Cash
Flow
Statement
CASH
FLOWS
FROM
OPERATING
ACTIVITIES
Net
Income:
Adjustments
for
Non-Cash
Charges:
Depreciation
and
Amortization:
Other
Amotization:
(Gain)
Loss
From
Sale
Of
Assets
PP&E
Write-off:
Stock-Based
Compensation
Expense:
Tax
Benefits
from
Stock
Options:
(Income)
Loss
on
Join
Venture:
Other:
Changes
in
Operating
Assets
and
Liabilities:
Accounts
Receivable:
Inventories:
Prepaid
Expenses
&
Other
Current
Assets:
Accounts
Payable:
Accrued
Expenses
&
Other
Current
Liabilities:
Other
Non-Current
Liabilities:
Other
Non-Current
Assets:
Net
Cash
Provided
by
Operating
Activities
Projected
FY18E
FY19E
FY15E
FY16E
FY17E
1,334
1,731
2,147
2,588
145
-
-
-
75
-
-
-
153
-
-
-
96
-
-
-
160
-
-
-
118
-
-
-
(197)
(286)
11
130
66
72
-
1,350
(157)
(227)
(31)
77
59
49
-
1,749
(534)
-
-
-
(534)
-
-
-
-
-
-
-
-
-
-
FY20E
FY21E
FY22E
3,086
3,370
3,648
3,867
165
-
-
-
142
-
-
-
170
-
-
-
162
-
-
-
175
-
-
-
177
-
-
-
180
-
-
-
191
-
-
-
186
-
-
-
203
-
-
-
(165)
(237)
(33)
80
62
51
-
2,184
(174)
(251)
(34)
85
66
53
-
2,640
(156)
(224)
(22)
76
43
35
-
3,170
(109)
(157)
(21)
53
40
33
-
3,561
(107)
(153)
(20)
52
39
32
-
3,862
(84)
(121)
(16)
41
31
25
-
4,130
(801)
-
-
-
(801)
(1,202)
-
-
-
(1,202)
(1,803)
-
-
-
(1,803)
(2,164)
-
-
-
(2,164)
(2,597)
-
-
-
(2,597)
(3,116)
-
-
-
(3,116)
(3,428)
-
-
-
(3,428)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
WACC
Analysis
Cost
of
Capital
Risk-free
Rate:
Market
Risk
Premium:
Beta:
Cost
of
Equity:
Default
Spread:
Pre-tax
Cost
of
Debt:
Cost
of
Preferred
Stock:
2.94%
6.42%
1.25
10.97%
0.40%
3.34%
0.00%
Levered
Beta
0.97
Unlevered
%
Debt
%
Equity Tax
Rate
Beta
17.2%
82.8%
35.0%
1.10
%
Debt
Equity
17.2%
6,729
0.0%
8,123
Levered
Beta
1.25
1.10
9.46%
10.97%
10.21%
Cost
of
Capital
0.109675
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
10.0%
10.1%
9.0%
7.9%
6.8%
5.7%
4.6%
3.5%
2.4%
1.3%
20.0%
10.3%
9.2%
8.1%
7.0%
5.9%
4.8%
3.7%
2.6%
1.5%
30.0%
10.5%
9.4%
8.3%
7.2%
6.1%
5.0%
3.9%
2.9%
1.8%
40.0%
10.7%
9.7%
8.6%
7.5%
6.4%
5.3%
4.2%
3.1%
2.0%
Debt
50.0%
11.0%
9.9%
8.8%
7.7%
6.6%
5.5%
4.4%
3.3%
2.2%
60.0%
11.2%
10.1%
9.0%
7.9%
6.8%
5.7%
4.6%
3.5%
2.4%
70.0%
11.4%
10.3%
9.2%
8.1%
7.0%
5.9%
4.8%
3.7%
2.6%
80.0%
11.6%
10.5%
9.4%
8.3%
7.2%
6.1%
5.0%
3.9%
2.8%
90.0%
11.8%
10.7%
9.6%
8.6%
7.5%
6.4%
5.3%
4.2%
3.1%
16
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Unlevered
FCF
Projection:
Annual
Unlevered
FCF
Projection
Revenue:
EBIT:
EBIT(1-t):
Non-cash
Adjustments:
Changes
in
NOWC:
CapEx:
FCFF:
FCFF,
remaining
periods:
Present
Value
of
FCFF:
Sum
of
PV
of
FCFF:
FY14A
$
4,371
1,258
825
161
(184)
(356)
446
FY15E
$
7,278
2,034
1,334
220
(205)
(534)
815
360
353
4,717
FY16E
$
9,323
2,639
1,731
249
(230)
(801)
948
948
865
FY17E
$
11,466
3,273
2,147
278
(241)
(1,202)
982
982
813
Projected
FY18E
FY19E
$
13,730 $
15,752
3,946
4,704
2,588
3,086
307
332
(255)
(248)
(1,803)
(2,164)
836
1,006
836
1,006
628
686
FY20E
$
17,172
5,138
3,370
352
(162)
(2,597)
964
964
596
FY21E
$
18,556
5,561
3,648
372
(158)
(3,116)
746
746
419
FY22E
$
19,650
5,894
3,867
388
(124)
(3,428)
703
703
358
83.0%
16.3%
3.6%
-14.8%
20.3%
-4.1%
-22.6%
-5.8%
4.50
x
9,805
2.50%
PV
of
Terminal
Value:
Present
Value
of
FCFF:
Implied
Enterprise
Value:
4,755
4,717
9,472
PV
of
Terminal
Value:
Present
Value
of
FCFF:
Implied
Enterprise
Value:
4,664
4,717
9,381
1,012
-
10,484
1,012
-
10,394
205.87
205.87
$50.93
29.06%
FY14A
$50.49
27.95%
Projected
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
815
948
982
836
1,006
964
746
703
360
948
982
836
1,006
964
746
703
353
865
813
628
686
596
419
358
4,717
Terminal
Value
-
Perpetuity
Growth
Method
Terminal
Value:
8,393
Terminal
FCF
Growth
Rate:
2.00%
PV
of
Terminal
Value:
Present
Value
of
FCFE:
Implied
Equity
Value:
4,075
4,717
8,792
205.87
$42.71
8.23%
17
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Base
Case
Sensitivity
Analysis:
Sensitivity
Table:
Discount
Rate
vs
Terminal
FCF
Growth
Rate
and
Implied
Share
Price
Discount
Rate
(WACC)
50.48805
9.20%
9.45%
9.70%
9.95%
10.20%
10.45%
10.70%
10.95%
11.20%
1.00%
52.37
51.15
50.00
48.92
47.89
46.91
45.98
45.10
44.26
1.25%
53.18
51.91
50.70
49.57
48.50
47.48
46.52
45.60
44.73
1.50%
54.04
52.71
51.45
50.26
49.14
48.09
47.08
46.13
45.22
2.50%
58.14
56.49
54.94
53.50
52.15
50.88
49.68
48.56
47.49
2.75%
59.36
57.61
55.97
54.45
53.03
51.69
50.44
49.26
48.15
3.00%
60.69
58.82
57.08
55.47
53.96
52.56
51.24
50.00
48.84
5.50
x
58.75
58.07
57.40
56.74
56.10
55.46
54.83
54.22
53.62
6.00
x
61.50
60.78
60.06
59.36
58.66
57.99
57.32
56.66
56.02
6.50
x
64.25
63.48
62.72
61.97
61.23
60.51
59.80
59.10
58.42
Sensitivity Table: Discount Rate vs Terminal EBITDA Multiple and Implied Share Price
50.927165
9.20%
9.45%
9.70%
Discount
Rate
9.95%
(WACC)
10.20%
10.45%
10.70%
10.95%
11.20%
2.50
x
42.26
41.86
41.46
41.07
40.68
40.30
39.93
39.57
39.21
3.00
x
45.01
44.56
44.12
43.68
43.25
42.83
42.42
42.01
41.61
3.50
x
47.76
47.26
46.77
46.29
45.82
45.36
44.90
44.45
44.01
Sensitivity Table: Average Sales per Retail Store vs New Retail Store and Implied Share Price
50.48805
New
Retail
Store
Growth
Rate
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
50.48805
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
4.00%
-2.00%
38.48
39.53
40.63
41.75
42.80
43.84
45.02
46.07
47.53
4.50%
-1.50%
40.81
41.90
43.04
44.20
45.29
46.37
47.59
48.67
50.19
5.00%
-1.00%
43.22
44.34
45.52
46.73
47.85
48.97
50.24
51.36
52.92
7.00%
1.00%
53.56
54.85
56.21
57.60
58.89
60.18
61.64
62.93
64.73
7.50%
1.50%
56.34
57.68
59.09
60.52
61.86
63.19
64.70
66.04
67.90
8.00%
2.00%
59.21
60.59
62.05
63.53
64.91
66.29
67.86
69.24
71.17
10.00%
1.00%
42.36
44.84
48.55
49.37
57.37
63.35
68.83
69.65
73.42
10.50%
1.50%
45.45
48.01
51.84
52.69
60.96
67.14
72.81
73.66
77.56
11.00%
2.00%
48.62
51.27
55.22
56.10
64.65
71.04
76.90
77.78
81.82
Sensitivity Table: Average Sales per Outlet Store vs New Outlet Store and Implied Share Price
50.48805
New
Outlet
Store
Growth
Rate
-6.00%
-3.00%
0.00%
3.00%
6.00%
9.00%
12.00%
15.00%
18.00%
50.48805
50.48805
-6.00%
-5.00%
-4.00%
-3.00%
0.00%
3.00%
4.00%
5.00%
6.00%
7.00%
-2.00%
25.60
27.62
30.67
31.33
37.86
42.73
47.21
47.87
50.94
7.50%
-1.50%
28.20
30.29
33.44
34.13
40.88
45.92
50.55
51.24
54.42
18
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Sensitivity
Table:
Licensing
Segment
Growth
vs
SG&A
as
%
Sales
and
Implied
Share
Price
50.48805
SG&A
Growth
Rate
25.00%
26.00%
27.00%
28.00%
29.00%
30.00%
31.00%
32.00%
33.00%
50.48805
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
22.00%
-8.00%
73.54
67.24
60.94
54.65
48.35
42.05
35.75
29.45
23.15
24.00%
-6.00%
74.05
67.74
61.43
55.11
48.80
42.49
36.17
29.86
23.55
26.00%
-4.00%
74.62
68.29
61.96
55.63
49.31
42.98
36.65
30.32
23.99
30.00%
2.00%
76.75
70.35
63.96
57.57
51.18
44.79
38.39
32.00
25.61
30.00%
4.00%
77.61
71.19
64.78
58.36
51.94
45.52
39.11
32.69
26.27
30.00%
6.00%
78.57
72.12
65.68
59.23
52.79
46.34
39.89
33.45
27.00
30.00%
8.00%
79.63
73.15
66.67
60.19
53.72
47.24
40.76
34.29
27.81
Ticker
COH
1913
UA
FOSL
HBI
BRBY
RMS
BOSS
RL
PVH
Maximum
75th
Percentile
Median
25th
Percentile
Minimum
Michael
Kors
KORS
Share
Price
$
32.28
4.04
95.30
53.88
32.72
21.15
381.57
100.90
113.57
92.08
Capitalization
Equity
Enterprise
Value
Value
$
8,958 $
8,572
10,334
10,638
20,553
21,298
2,594
3,053
12,820
15,315
9,324
8,552
39,833
38,836
6,964
7,164
9,727
9,269
7,601
10,516
$
381.57
99.50
$
72.98
32.39
4.04
$
39,833
12,199
$
9,525
7,940
2,594
$ 39.46
$ 8,123
Share
Price
$
32.28
4.04
95.30
53.88
32.72
21.15
381.57
100.90
113.57
92.08
Capitalization
Equity
Enterprise
Value
Value
$
8,958 $
8,572
10,334
10,638
20,553
21,298
2,594
3,053
12,820
15,315
9,324
8,552
39,833
38,836
6,964
7,164
9,727
9,269
7,601
10,516
$
381.57
99.50
$
72.98
32.39
4.04
$
39,833
12,199
$
9,525
7,940
2,594
$
38,836
14,146
$
9,892
8,557
3,053
5.8
x
2.7
x
2.1
x
1.3
x
0.9
x
5.4
x
3.0
x
2.3
x
1.3
x
0.9
x
4.3
x
2.9
x
2.2
x
1.2
x
0.9
x
45.4
x
13.1
x
9.6
x
7.5
x
4.9
x
41.4
x
14.8
x
10.2
x
7.4
x
5.1
x
32.8
x
14.0
x
9.4
x
6.9
x
4.5
x
98.8
x
27.3
x
22.1
x
15.3
x
6.9
x
88.7
x
26.8
x
19.5
x
16.0
x
9.2
x
68.3
x
23.9
x
16.4
x
14.4
x
8.1
x
$ 39.46
$ 8,123
$ 7,111
1.6 x
1.0 x
0.8 x
5.2 x
2.7 x
2.1 x
9.2 x
4.9 x
3.8 x
Valuation
Statistics
Company
Name
Coach,
Inc.
Prada
S.p.A
Under
Armour,
Inc.
Fossil
Group,
Inc.
Hanesbrands
Inc.
Burberry
Group
plc
Herms
International
Socit
Hugo
Boss
AG
Ralph
Lauren
Corporation
PVH
Corp.
COH
1913
UA
FOSL
HBI
BRBY
RMS
BOSS
RL
PVH
Maximum
75th
Percentile
Median
25th
Percentile
Minimum
Michael
Kors
KORS
LTM
$
4,183
3,938
3,688
3,424
5,845
3,881
4,900
2,979
7,506
8,045
Revenue
2015E
$
4,469
3,750
3,924
3,281
5,853
2,565
4,873
2,789
7,612
8,025
2016E
$
4,656
3,891
4,922
3,361
6,042
2,731
5,312
2,957
7,934
8,357
$
38,836
14,146
$
9,892
8,557
3,053
$
8,045
5,609
$
4,060
3,736
2,979
$
8,025
5,608
$
4,197
3,399
2,565
$ 7,111
$ 4,512
$ 7,278
Projected Projected
Revenue EBITDA
Growth
Growth
4.2%
11.1%
3.8%
6.0%
25.4%
26.2%
2.4%
4.1%
3.2%
6.7%
6.5%
5.9%
9.0%
13.0%
6.0%
6.9%
4.2%
8.1%
4.1%
4.6%
LTM
$
921
965
469
628
960
862
1,748
623
1,221
953
EBITDA
2015E
$
957
932
515
465
998
566
1,692
610
1,176
1,101
2016E
$
1,063
988
650
484
1,064
600
1,912
652
1,271
1,152
$
8,357
5,860
$
4,789
3,493
2,731
$
1,748
964
$
937
687
469
$
1,692
1,075
$
944
577
465
$
1,912
1,130
$
1,025
650
484
$
859
463
$
404
369
208
$
1,013
584
$
465
326
232
$
1,144
649
$
526
353
239
25.4%
6.4%
4.2%
3.8%
2.4%
26.2%
10.4%
6.8%
5.9%
4.1%
35.7%
22.2%
19.6%
16.3%
11.8%
34.7%
22.0%
19.2%
14.5%
13.1%
36.0%
22.6%
19.8%
14.8%
13.2%
$ 9,323
$ 1,356
$ 2,675
$ 3,412
$ 881
$ 1,660
$ 2,138
28.1%
27.6%
30.0%
36.8%
36.6%
Enterprise
Value
/
Revenue
LTM
2015E
2016E
2.0
x
1.9
x
1.8
x
2.7
x
2.8
x
2.7
x
5.8
x
5.4
x
4.3
x
0.9
x
0.9
x
0.9
x
2.6
x
2.6
x
2.5
x
2.2
x
3.3
x
3.1
x
1.7
x
1.8
x
1.6
x
2.9
x
3.1
x
2.9
x
1.1
x
1.1
x
1.1
x
1.1
x
1.1
x
1.0
x
Enterprise
Value
/
EBITDA
LTM
2015E
2016E
9.3
x
9.0
x
8.1
x
11.0
x
11.4
x
10.8
x
45.4
x
41.4
x
32.8
x
4.9
x
6.6
x
6.3
x
16.0
x
15.4
x
14.4
x
9.9
x
15.1
x
14.3
x
4.9
x
5.1
x
4.5
x
13.7
x
14.0
x
13.1
x
7.0
x
7.3
x
6.7
x
9.0
x
7.8
x
7.4
x
2014A
22.2
x
22.0
x
98.8
x
6.9
x
31.7
x
25.5
x
10.9
x
28.0
x
13.3
x
21.2
x
P
/
E
Multiple
2015E
17.6
x
24.5
x
88.7
x
10.4
x
21.4
x
29.0
x
9.2
x
27.5
x
15.9
x
16.2
x
LTM
22.0%
24.5%
12.7%
18.3%
16.4%
22.2%
35.7%
20.9%
16.3%
11.8%
EBITDA
Margin
2015E
2016E
21.4%
22.8%
24.9%
25.4%
13.1%
13.2%
14.2%
14.4%
17.0%
17.6%
22.1%
22.0%
34.7%
36.0%
21.9%
22.0%
15.4%
16.0%
13.7%
13.8%
2016E
15.0
x
22.7
x
68.3
x
10.9
x
17.7
x
27.2
x
8.1
x
24.3
x
14.2
x
14.9
x
Revenue
&
EV/EBITDA
Multiples:
Michael
Kors
has
been
well
performing
in
terms
of
Revenue
Growth
and
EBITDA
Margin,
so
we
think
it
deserves
EBITDA
Multiple
in
the
Mean
75th
range.
Given
the
growth
is
currently
abnormal
and
unstable
in
the
long-term,
we
chose
EBITDA
Multiple
of
9.6x
in-line
with
the
Mean.
P/E
&
PEG:
We
put
less
or
little
weight
on
P/E.
The
reason
for
that
is
because
Earnings
is
misleading
given
the
impacts
of
non-cash
items.
However,
taking
a
further
step
to
integrate
growth
into
P/E
multiples,
we
find
current
stock
price
is
cheap
given
that
the
PEG
ratios
for
FY14A
and
FY15E
are
0.29
and
0.09.
Result:
In
the
Base
Case,
we
use
EV/EBITDA
of
9.6x,
which
produces
the
result
of
$70.03.
19
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Investment
Risks
The
following
represent
greatest
risks
to
our
investment
thesis:
Brand
Management:
Customers
taste
does
change.
While
Michael
Kors
has
been
succeeding
in
turning
out
exquisite
luxury
goods,
brand
saturation
could
significantly
damage
the
firms
customer
base
and
put
a
downward
spiral
on
sales.
Failure
to
release
newer-style
products
with
higher
prices,
customers
will
move
towards
products
that
are
more
luxurious
and
expensive.
The
lack
of
brand
devotion
could
prove
to
be
fatal
to
the
firms
success.
Too-Central
Leadership:
While
Michael
Kors
is
the
main
designer
behind
the
firms
success
and
most
important
decision,
his
leadership
has
a
possibility
of
leading
the
firm
towards
failure.
It
is
possible
that
investors
sole
focus
on
the
chief
designer
would
negatively
affects
the
share
price.
The
luxury
market
fails
to
pick
up:
Economic
challenges
and
socio-political
tensions
in
Eastern
Europe
could
hinder
tourism
and
growth
in
the
luxury
good
market.
As
local
spending
is
experiencing
slow
growth,
a
less
dynamic
tourism
is
a
drag
to
the
industry
growth.
Other
market-specific
and
corporate-specific
risks
include:
(1)
Weather-related
Issues
can
deter
tourism;
(2)
A
stronger
dollar
is
a
hindrance
to
revenue
growth
from
overseas
stores.
20
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Revenue
Assumptions
Total
Revenue
YoY
Growth
Rate
Revenue
by
Segments
Retail
Wholesale
Licensing
Total
Revenue
3,361
3,694
223
7,278
Retail
stores
Increase
during
period
Growth
YoY
Post-toggle
Growth
YoY
Average
Sales
per
Retail
Store
Growth
YoY
Post-toggle
Growth
YoY
Outlet
Stores
Increase
during
period
Growth
YoY
Post-toggle
Growth
YoY
Average
Sales
per
Outlet
Store
Growth
YoY
Post-toggle
Growth
YoY
Licensing
Segment
Growth
YoY
Financial
Ratios
Profitability
Ratios
Return
on
Assets
Return
on
Capital
Return
on
Equity
FY10A
FY11A
FY12A
4,287
4,745
290
9,323
FY13A
FY14A
5,375
5,742
348
11,466
FY15E
6,526
6,786
418
13,730
FY16E
7,837
7,455
460
15,752
FY17E
8,952
7,714
506
17,172
FY18E
FY19E
10,126
7,874
556
18,556
FY20E
11,363
7,703
584
19,650
FY21E
FY22E
25.8%
39.9%
83.2%
29.2%
43.7%
50.7%
40.1%
51.7%
52.9%
36.0%
44.2%
46.4%
32.0%
38.8%
43.5%
38.0%
45.6%
45.6%
32.6%
38.6%
38.6%
28.6%
33.2%
33.2%
25.6%
29.1%
29.1%
23.3%
26.2%
26.2%
20.2%
22.3%
22.3%
17.9%
19.5%
19.5%
15.9%
17.2%
17.2%
2.4
x
7.9
x
11.1
x
33.0
3.9
x
93.0
N/A
N/A
N/A
2.4
x
9.0
x
12.6
x
29.1
3.6
x
101.2
9.1
x
39.9
90.3
2.2
x
10.6
x
13.1
x
27.9
3.9
x
94.7
11.6
x
31.3
91.3
1.9
x
11.2
x
13.1
x
27.8
3.7
x
97.8
11.4
x
31.9
93.7
1.8
x
9.6
x
13.2
x
27.6
3.6
x
100.2
12.0
x
30.3
97.5
1.7
x
7.6
x
15.8
x
23.2
4.5
x
81.0
14.4
x
25.4
78.7
1.5
x
5.8
x
14.6
x
25.0
4.2
x
87.7
12.3
x
29.7
83.0
1.3
x
4.3
x
14.3
x
25.5
4.1
x
89.3
12.1
x
30.3
84.5
1.2
x
3.2
x
14.2
x
25.8
4.0
x
90.4
11.9
x
30.6
85.5
1.1
x
2.5
x
13.9
x
26.3
4.0
x
92.2
11.7
x
31.2
87.2
0.9
x
2.0
x
13.6
x
26.9
3.9
x
94.4
11.4
x
32.0
89.4
0.8
x
1.6
x
13.5
x
27.0
3.8
x
94.8
11.4
x
32.1
89.7
0.7
x
1.3
x
13.4
x
27.3
3.8
x
95.8
11.2
x
32.5
90.6
Margin
Analysis
Gross
Margin
SG&A
Margin
EBITDA
Margin
EBIT
Margin
Net
Income
Margin
55.5%
34.8%
20.7%
17.5%
9.0%
57.8%
35.7%
22.2%
19.3%
11.3%
59.9%
28.5%
31.4%
28.9%
18.2%
60.9%
28.0%
32.9%
30.5%
20.0%
60.6%
28.6%
31.9%
28.8%
20.2%
58.9%
29.0%
29.9%
27.9%
18.3%
58.9%
29.0%
29.9%
28.3%
18.6%
58.9%
29.0%
29.9%
28.5%
18.7%
58.9%
29.0%
29.9%
28.7%
18.9%
58.9%
28.0%
30.9%
29.9%
19.6%
58.9%
28.0%
30.9%
29.9%
19.6%
58.9%
28.0%
30.9%
30.0%
19.7%
58.9%
28.0%
30.9%
30.0%
19.7%
1.9
x
0.8
x
2.8
x
1.4
x
6.0
x
4.1
x
5.8
x
4.1
x
6.1
x
4.1
x
6.1
x
4.6
x
6.7
x
5.2
x
7.1
x
5.5
x
7.1
x
5.6
x
7.5
x
5.9
x
7.8
x
6.2
x
7.9
x
6.3
x
8.0
x
6.5
x
47.7%
68.6%
75.6
x
0.7
x
4.7%
32.4%
167.9
x
0.1
x
NM
18.8%
NM
NM
NM
18.5%
NM
NM
NM
16.8%
NM
NM
NM
16.8%
NM
NM
NM
14.7%
NM
NM
NM
13.0%
NM
NM
NM
11.6%
NM
NM
NM
10.2%
NM
NM
NM
8.9%
NM
NM
NM
8.0%
NM
NM
NM
7.1%
NM
NM
DuPont
Analysis
Net
Income
Margin
Total
Asset
Turnover
Equity
Multiplier
ROE
9.0%
2.4
x
3.9
x
83.2%
11.3%
2.4
x
1.8
x
50.7%
18.2%
2.2
x
1.3
x
52.9%
20.0%
1.9
x
1.2
x
46.4%
20.2%
1.8
x
1.2
x
43.5%
18.3%
1.7
x
1.5
x
45.6%
18.6%
1.5
x
1.4
x
38.6%
18.7%
1.3
x
1.3
x
33.2%
18.9%
1.2
x
1.3
x
29.1%
19.6%
1.1
x
1.3
x
26.2%
19.6%
0.9
x
1.2
x
22.3%
19.7%
0.8
x
1.2
x
19.5%
19.7%
0.7
x
1.2
x
17.2%
Efficiency
Ratios
Total
Asset
Turnover
Fixed
Asset
Turnover
Accounts
Receivable
Turnover
DSO
Inventory
Turnover
DIO
Accounts
Payable
Turnover
DPO
CCC
21
Equity
Research
Apparel,
Accessories
and
Luxury
Goods
Bibliography
Michael
Kors
Holdings
Ltd.
(n.d.).
Retrieved
November
5,
2015,
from
http://www.marketwatch.com/investing/stock/kors/financials/cash-flow#
Michael
Kors
Holdings
Ltd.
(n.d.).
Retrieved
November
5,
2015,
from
http://www.marketwatch.com/investing/stock/kors/financials/balance-sheet
Michael
Kors
Holdings
Ltd.
(n.d.).
Retrieved
November
5,
2015,
from
http://www.marketwatch.com/investing/stock/kors/financials
http://s2.q4cdn.com/702269136/files/doc_financials/annual_report/2015-Annual-Report-10K.pdf
LaFreniere,
M.
(2015,
September
4).
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Kors
Outlet
Pricing
Class
Action
Lawsuit
Settlement.
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November
5,
2015,
from
http://topclassactions.com/lawsuit-settlements/open-lawsuit-
settlements/147346-michael-kors-class-action-lawsuit-settlement/
Kapner,
S.
(2015,
May
27).
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Kors
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as
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Rare
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November
5,
2015,
from
http://www.wsj.com/articles/michael-kors-gives-another-
disappointing-forecast-1432727499
D'Arpizlo,
Claudia,
Frederica
Levato,
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Zito,
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