Michael Kors Declines After Fossil Lowers 2012 ForecastLeon Lazaroff
Michael Kors Holdings Ltd., the Hong Kong-based luxury-clothing company, dropped to a two-week low in New York as Fossil Inc. reduced its 2012 earnings forecast, leading a decline among retailers.
Michael Kors, named for its designer-founder, tumbled 5.3 percent to $41.75, the lowest since April 24, at the close in New York. Trading totaled 5.8 million shares, more than twice the stock’s daily average three-month volume, according to data compiled by Bloomberg. The NYSE/ARCA Consumer Discretionary Select Sector Index, which includes Fossil, fell for a fourth day, dropping 1.2 percent to 444.39.
Richardson, Texas-based Fossil, which obtained one-third of its 2011 revenue from Europe, fell 38 percent to $78.52, the biggest decline on the Standard & Poor’s 500 Index, after reducing its full-year earnings forecast “amid a softening macro environment” in Europe. Fossil, which manufactures Kors watches along with other licensed brands, said sales of those items grew 48 percent in the first quarter.
“Kors is getting unfairly punished here,” Corinna Freedman, an analyst at Wedbush Securities Inc. in New York who rates the stock outperform, said by phone. “For Kors, Europe is a small part of its business though it is a growth area.”
Freedman has an outperform rating on Kors with a 12-month price target of $48. Kors has 29 retail stores in the region and plans to open 10 to 15 additional outlets per year, Kors Chief Executive John Idol said during a February investor conference call.
Earnings per share in 2012 will be as much as $5.33, Fossil said today. Previously, it had forecast a maximum of $5.50. Analysts projected $5.56, the average of estimates compiled by Bloomberg.