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.
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)
@Pharrell and his wife Helen Lasichanh were among the stars that came out to celebrate @rimowa’s first pop-up concept shop. The space, which is located on Rodeo Drive in Beverly Hills, draws inspiration from airport luggage carousels and lounge areas – and features the company’s luggage and accessories. If the pop-up is successful it could pave the way for addition temporary shops throughout the world. #wwdfashion (📷: Owen Kolasinski/BFA)
@carineroitfeld celebrated @crfashionbook’s first calendar last night with a dinner party at Spring Place in Manhattan. Photographed by @stevenkleinstudio, the calendar takes on a fitness theme and features @joansmalls, @gigihadid, @danielle_herrington_ – pictured here – and more. “[Carine Roitfeld] wanted me to feel sexy and she wanted me to be myself and feel it out on my own and do what I felt was right,” said Herrington, aka Miss October. #wwdeye
@saintrecords and @virgilabloh last night at @americanexpress’ “A Night With Success Makers” event. “I always bring it back to community because without that I wouldn’t have the courage,” said Knowles when asked how she has gotten where she is now. Read more highlights from their conversation on WWD.com. #wwdeye (📷: @lizdoupnik)
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@assouline’s latest book, “The Spirit of Bentley: Be Extraordinary” captures the adventurous attitudes and opulent lifestyles of @bentleymotors’ most creative owners and enthusiasts throughout the U.K. The 292-page hardcover has a section dedicated to showing its team of skilled artisans and photos of its most colorful owners, from George Bamford to designer @alicetemperley, pictured here by Aline Coquelle. #wwdeye
@google released its report on the most popular search terms this year. For fashion brands, the list was led by @gucci, the luxury brand that stunned the market last October when it pledged to stop using fur. Runner ups were @supremenewyork and @fashionnova, along with more established brands like @louisvuitton, @chanelofficial and @ysl. #wwdfashion (📷: @aitorrosasphoto)
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)