Is Recent IPO Michael Kors Set to Overtake Coach?

Is Recent IPO Michael Kors Set to Overtake Coach?

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Michael Kors Holdings (KORS) has more than doubled from its $20 IPO offering in mid-December. And brand recognition for the company has jumped from 11% of Americans to 71% since brand owner Michael Kors joined the reality show "Project Runway" as a judge. It can't be denied that the brand name is out there, and the products are selling. (STAY AHEAD OF THE CURVE: Follow Kapitall on Twitter)

What's more, the company has just begun its large expansion projects.  According to Bloomberg, Kors aims to more than double its North American store fleet to 400 and more than quadruple to 1,000-plus its department-store boutiques. It will also operate in malls and street locations with a focus on accessories-heavy collections.

All this success and aspiration comes at a heavy cost to Coach (COH). "This is the first mega-brand emerging to take them more- or-less head-on in a direct hit," said Steven Dennis, founder of Dallas-based SageBerry Consulting LLC, to Bloomberg. "That's definitely going to impact Coach's business."

Consider: Revenue grew 68% in its fiscal third quarter ended December 31st, 2011.In the same three months Coach's revenue grew 15% – an increase that beat analyst expectations, but still underwhelms comparatively.

Of course, Dennis warn that "Kors is moving down the fashion ladder to become increasingly accessible while Coach is trying the harder task of climbing it." This puts the more fashion-oriented Kors more at risk for missing on current fashion trends.

 Business Section: Investing Ideas

Since Kors' IPO, share value has doubled, while Coach grew by one third. Coach is now worth $22.7 billion and Michael Kors $9.1 billion. Do you think Kors has what it takes to meet Coach at its current level?

Here are some tools to help you start your own analysis on the company and its competitors.

 

Press play on Kapitall's Compar-O-Matic to see changes in market cap for Kors and competitors. Click on the icons to access additional free tools and features.

 

Press play to compare monthly returns.

 

Use the Turbo Chart to See how KORS and COH performed against the S&P 500 index.

 

Written by Rebecca Lipman.

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