Rocket man: That’s Michael Kors—designer champ for the aspirational customer—soaring above his one-time formidable rival, Coach. (Getty Images for Michael Kors)
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Fashion’s red-hot “affordable luxury” category has a new king.
The fast-growing firm founded by Michael Kors — the baby-faced designer who recently stepped down as a longtime “Project Runway” judge — said it expects profits this year to double on surging demand for its shoes, clothing and handbags.
Comparable-store sales in the October-to-December holiday quarter surged 41 percent, the Hong Kong-based company said, sending its stock surging as much as 14 percent to an all-time high of $64.80.
The shares — which have more than tripled since Kors went public 14 months ago — closed yesterday at $62, up 8.8 percent.
As of Dec. 31, the designer owned 3.7 percent of his namesake company’s outstanding shares, which yesterday had a market cap of $12.33 billion.
Assuming Kors has retained that stake, its value swelled yesterday by $36 million, to $456 million.
The blowout holiday season, whose profits were fueled in particular by healthy margins on accessories, stood in sharp contrast to recent results at Coach, its arch rival in affordable luxury.
“They are gaining market share from Coach,” Morningstar analyst Paul Swinand said of Kors in an interview yesterday with Reuters. “But it’s not only Coach — it’s also the little guys that are getting squeezed in a highly competitive market.”
Coach — whose shares are off 35 percent over the past year amid slackening demand for its purses and clutches — said last month its comparable sales in the October-to-December period dropped 2 percent.
That’s partly because Kors has been hitting Coach where it hurts, churning out smaller handbag designs that compete toe-to-toe with Coach’s core items.
Wall Street is watching the battle closely, as handbags continue to be significantly more profitable than clothing for retailers.
As more handbag-obsessed women turn toward Kors, its business is skyrocketing in the US and Europe, whose strength fueled a 70 percent revenue jump in the period.
That resulted in $636.8 million in quarterly revenue, trouncing Wall Street’s forecast of $540.3 million.