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Michael Kors is staging a giant “friends and family sale” this summer — on Wall Street.
The New York fashion label, whose 51-year-old namesake designer in recent seasons has raised his profile as a tough judge on the “Project Runway” reality TV series, is quietly looking to raise as much as $500 million to fund its aggressive global-expansion plans, The Post has learned.
In an effort that was kept remarkably hush-hush throughout the spring, Michael Kors has been “passing the hat” to a pool of well-placed private investors, according to one source close to the situation. With the help of advisers, including Morgan Stanley, Michael Kors is looking to sell an equity stake of about 25 percent in the coming months, sources said.
That means the deal, among the fashion industry’s largest during the past several years, isn’t being offered at a bargain price. The equity sale would value Michael Kors at a staggering $2 billion, which is about twice the company’s annual revenue.
In addition, sources close to the negotiations said the deal values the company at about 23 times Ebitda, or earnings before interest, taxes, depreciation and amortization, a key investing metric. By comparison, Italian fashion giant Prada this month was valued at about 20 times Ebitda as it went public on the Hong Kong stock exchange.
“I think you could argue that Michael Kors deserves a richer valuation because they’ve got a lot more room to grow in places like Europe and Asia,” said Robert Burke, president of Robert Burke Associates, a New York consulting firm to the luxury industry.
Indeed, despite the steep markup, “people seem to be falling over each other to be a part of this,” according to one person briefed on the deal.
That’s partly because Michael Kors, which has more than doubled in size during the past four years, is cranking out profits despite the costly expansion of its retail chain, which this spring added a 7,000 square-foot Paris boutique on Rue St. Honore, its biggest, splashiest yet. With more than 100 stores worldwide, Michael Kors plans to double that figure in 2012.
The growth strategy has been masterminded by Silas Chou and Lawrence Stroll, the fashion financiers who took Tommy Hilfiger public in the early 1990s after taking control of it privately a few years earlier.
Having poured $100 million into Michael Kors in exchange for a majority stake in 2003, Chou and Stroll aim to further multiply the value of their investment with an initial public offering of Michael Kors “sometime in the next few years,” according to a source.
In the meantime, the designer and his CEO, John Idol, are cranking out clothing and accessories focused on the “affordable luxury” price range that has been dominated by labels such as Coach and Ralph Lauren, sources said. james.covert@nypost.com