If all goes according to plan, that’s how much the designer could get as part of an initial public offering unveiled Friday that could value Michael Kors Holdings at $3.63 billion in the first major IPO of an American designer in years. And his partners, Silas Chou and Lawrence Stroll, could earn even more — more than $490 million.
Kors, who saw his budding business sink into bankruptcy in the early Nineties, paved the way for the offering by raising money from private investors this summer and plans to sell up to 48 million shares — 41.7 million initially, and an additional 6.3 million if demand warrants — for between $17 and $19 apiece, according to a filing with the Securities and Exchange Commission. That could raise more than $900 million and would give the business, backed by Chou and Stroll and led by chief executive officer John Idol, a market capitalization larger than Saks Inc. ($1.52 billion), Salvatore Ferragamo ($2.55 billion at current exchange), Guess Inc. ($2.62 billion) and Tod’s SpA ($2.84 billion). RELATED STORY: Lawrence Stroll and Silas Chou's Next Move? >>
The firm intends to trade on the New York Stock Exchange under the ticker “KORS” after the offering, which is being underwritten by Morgan Stanley, J.P. Morgan and Goldman, Sachs & Co. and others.
For Kors, his introduction to Wall Street is a moment 30 years in the making. That’s how long it has taken the designer to build his own name into a brand and a business that now spans 74 countries and includes accessories, apparel and footwear, as well as retail, wholesale and licensing operations.
“It’s a marvelously successful company, and I think an IPO will be very successful,” said Laurence Leeds, chairman of Buckingham Capital Management, adding he might invest in the firm. “They’re putting a high valuation on the company and it deserves a high valuation. The company is very well run, is extremely successful, has a splendid track record and excellent management.”
Some already have their piece of the action, having invested in Kors as a private company, and are looking to sell.
Sportswear Holding is controlled by Stroll and Chou and plans to offer up to 25.9 million shares of its stake, possibly raising $492.7 million while retaining ownership of 35.5 percent of the company. The designer plans to sell 5.8 million shares, raising up to $111.1 million, while retaining an 8.1 percent stake.
Marciano Investment Group, controlled by Paul Marciano and Maurice Marciano of Guess Inc., plans to sell 206,294 shares, netting $3.9 million, while holding on to more than 600,000 shares of Kors. Paul Marciano, vice chairman and ceo of Guess, couldn’t be reached for comment.
The filing also details two employment agreements that lock in Kors, as well as Idol — and both are expected to be revised further before the IPO. Kors’ deal was signed in July and stipulates that he will be employed by the firm until his death, he becomes disabled or he is dismissed “for cause.” As part of the agreement, Kors “shall have creative and aesthetic control of the products produced and sold under or bearing the ‘Michael Kors’ and related trademarks, including exclusive control of the design of such products, provided that the exercise of such control must be commercially reasonable.” The designer gets a minimum salary of $2.5 million for life — plus bonus and other perks, such as a car and driver and health club membership.
Idol’s deal, also signed in July, would keep him on as ceo until at least March 31, 2015, and could be renewed annually after that — provided he is not dismissed “for cause.” The filing did not stipulate his compensation package.
Kors famously started his career at Lothar’s on 57th Street, where he designed a collection for the boutique and was discovered while merchandising its windows by Dawn Mello, then at Bergdorf Goodman. Mello encouraged the Fashion Institute of Technology student to put together his own collection, which was subsequently picked up by Bergdorf’s and ultimately provided the starting point for his career.
He staged his first runway show in 1984, and while his fashion star rose rapidly, there was no shortage of ups and downs. Throughout the first two decades, Kors struggled to build his business into significant volume, and several licenses that would support his growth failed to take off at the time.
Kors recalled those years during an interview with WWD at the opening of his Paris store in March: “When we were in Chapter 11 in the early Nineties, I had been at it for over a decade, which I thought was a really long time. Now I’m like, ‘I was a neophyte.’ But at the time, I kept thinking, ‘If something really does happen, will I cease being me? Oh, my God, I’ve worked so hard, and I’ve killed myself, and if this doesn’t work out and we can’t manage to get ourselves out of this situation, will I have any identity as a person? Is all my identity tied up in being Michael Kors?’ I finally realized that if I had to go back to square one, that if I was just honest and authentic, it would work. It’s what works. You have to know yourself.”
Stroll and Chou bought the company in 2003 and helped grow the business, paving the way to this IPO, as they did for Tommy Hilfiger previously that earned the two men — as well as Hilfiger — a fortune. Hilfiger’s company is now owned by PVH Corp.
The filing for an IPO is a singular event in the life of a company, one in which it is forced to reveal its financial secrets and begin to sell its vision to investors at large. Kors takes 124 pages — before voluminous financial statements and addendums — to explain its business and the current state of the fashion industry to Wall Street.
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)