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Michael Kors (KORS) Looks Promising: Invest in the Stock

Shares of Michael Kors Holdings Limited KORS are riding high on positive earnings surprise, upbeat outlook, new store opening, acquisitions, upgrading e-commerce platform  and Runway 2020 Strategic Plan. Ever since this Zacks Rank #1 (Strong Buy) company reported quarterly numbers on Nov 6, its shares have surged 28.3%, outperforming the industry’s growth of 11.1%. Further, Michael Kors has a long-term earnings growth rate of 7.5%, making us confident of its inherent strength. Let’s delve deeper and find out what’s fueling this stock.

Growth Drivers

Michael Kors continued with positive earnings surprise streak for the 10th consecutive quarter, when it posted second-quarter fiscal 2018 results. Further, revenues came ahead of the estimate for the third straight quarter. Following better-than-expected results, the company raised fiscal 2018 outlook. Michael Kors now envisions fiscal 2018 total revenues to be approximately $4.59 billion, up from the previous estimate of approximately $4.275 billion. Management anticipates earnings in the band of $3.85-$3.95 per share for the fiscal year, up from previous estimate of $3.62-$3.72 per share.

Further, sales from Asia have shown tremendous improvement. The company had stated that it will continue with the expansion drive in Asia and also believes it has an opportunity worth $1 billion in the long term. During second-quarter fiscal 2018, total retail net sales in Asia surged 30.4% on account of new store opening as well as positive comparable sales growth.

Michael Kors’ acquisition of Jimmy Choo will help diversify portfolio and tap international markets. The buyout is likely to be accretive in the low-single digits in fiscal 2020. In order to drive top-line growth, Michael Kors has been focusing on store expansion. In fiscal 2016, the company opened 142 new stores, which included 47 in the Americas and 95 worldwide. In fiscal 2017, it opened 159 net new stores openings, which includes 111 outlets related to the acquisition of the earlier licensed operation in Greater China.

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Michael Kors stated that its project Runway 2020 strategic plan, which focuses on product innovation, brand engagement and customer experience, has made rapid progress during the second quarter. As part of the company’s strategy of product innovation it launched Bancroft in the Michael Kors collection line. The product innovation strategy aided the global Women's footwear comparable sales to increase by double digit.

3 Other Retail Stocks Hogging the Limelight

Other top-ranked stocks worth considering in the retail space include Tailored Brands, Inc. TLRD, G-III Apparel Group, Ltd. GIII and Urban Outfitters, Inc. URBN. All three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Tailored Brands have gained 25.3% in a month.

G-III Apparel Group stock has surged 33.7% in a month and also has an impressive long-term earnings growth rate of 15%.

Urban Outfitters has an impressive long-term earnings growth rate of 12%.

Will You Make a Fortune on the Shift to Electric Cars?

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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

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Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
 
G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report
 
Michael Kors Holdings Limited (KORS) : Free Stock Analysis Report
 
Tailored Brands, Inc. (TLRD) : Free Stock Analysis Report
 
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