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Update: What We Make Of Michael Kors' Earnings

While Michael Kors (K>ORS) reported earnings Thursday with mixed investor reaction, we still affirm a bullish outlook on the stock and maintain a $94 fair value.

Michael Kors had a mixed Q3, reporting net revenues of $689.4 million, up 37% y/y. The company also reported net income of $1.26 billion for a $1.48 EPS, beating estimates of $1.33 EPS but missing on net income estimates of $1.3 billion. Comps grew 8.6%, missing investors hope for 12.6% comps growth.

The 37% y/y revenue growth, though, was dragged by struggling North American sales, which slowed to 6.8% from 24% growth a year ago. A major reason for this decrease in North American sales was due to growth in the e-commerce market, though another reason for this decrease was that the previous growth rates, as CEO John Idol pointed out, were unsustainable.

Another piece of bad news from the report came in… Read More …