According to Citigroup, shares of Michael Kors Holdings Inc. are getting too expensive.
The stock fell 3.8 percent after it was downgraded to “neutral” from “buy” Tuesday morning by Citigroup. Citigroup analyst Oliver Chen said shares of Kors, even though he still expects strong comps likely to exceed guidance, have reached a fair valuation “given Kors’ 60 percent stock run in 2013.”
Chen’s new price target for the stock is $93 from $95. It closed at $78.94 in trading Tuesday on the Big Board.
In his analysis, Chen said Kors’ $16.8 billion market cap is higher than its accessible luxury peers: Tiffany & Co. Inc.’s is $11.8 billion, while Coach Inc. and Ralph Lauren Corp are each at $15.8 billion. He also pointed to some sector weakness in watches — Macy’s noted weakness in watches during the third quarter and Fossil maintained sales guidance, but slightly lowered margins due to promotions — and how Coach’s strategy to elevate factory store promotions at 70 percent off could represent increased competition for Kors.
While Chen said that the accessory sector read-throughs could convey a “possibility of lack of upside,” the potential weakness in watches and softer handbag performance might be offset by growth in jewelry and men’s.
In his mall checks, Chen said that while “Kors on an overall basis may not be more promotional than last year,” he did conclude that there could have been less promotions during the holiday season when compared with a year ago.
Other risk factors include future fashion execution; supply chain concerns over implementation of the new distribution center and European expansion, and the integration of the e-commerce operation to an in-house function.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews