KORS - Weiss 17 08

August 6, 2017
NYSE: KORS
MICHAEL KORS HOLDINGS LTD

BUY HOLD SELL
HOLD
RATING SINCE 05/20/2016
A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 8/3/2017
NA NA 0.09 $5.7 Billion $32.38-$52.67 $36.45
Sector: Consumer Goods & Svcs Sub-Industry: Apparel, Accessories & Luxury Goods Source: S&P
Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
KORS BUSINESS DESCRIPTION
Michael Kors Holdings Limited design, markets, 60
distributes, and retails branded women's apparel
and accessories, and men's apparel. The company 55
operates in three segments: Retail, Wholesale, and
Licensing. 50
STOCK PERFORMANCE (%) 45

3 Mo. 1 Yr. 3 Yr (Ann)
Price Change -1.97 -25.65 -23.63 40
GROWTH (%) 35
Last Qtr 12 Mo. 3 Yr CAGR
Revenues -11.17 -4.64 10.72 30
Net Income -115.13 -34.16 -5.83 Rating History
EPS -117.34 -26.97 0.41 HOLD BUY HOLD
RETURN ON EQUITY (%) Volume in Millions

60
KORS Ind Avg S&P 500 40
Q4 2016 34.69 25.66 13.16
20
Q4 2015 42.04 24.98 11.83
0
Q4 2014 39.31 22.09 13.71 2015 2016 2017
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate MICHAEL KORS HOLDINGS LTD (KORS) a HOLD. The primary factors that have impacted our rating
are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the
expectation of either a positive or negative performance for this stock relative to most other stocks. The
company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit
margins and largely solid financial position with reasonable debt levels by most measures. However, as a
counter to these strengths, we also find weaknesses including deteriorating net income, weak operating
cash flow and a generally disappointing performance in the stock itself.
11.22 24.86 24.65
KORS Ind Avg S&P 500 HIGHLIGHTS
The gross profit margin for MICHAEL KORS HOLDINGS LTD is rather high; currently it is at 58.20%. It has
increased from the same quarter the previous year. Regardless of the strong results of the gross profit
EPS ANALYSIS¹ ($) margin, the net profit margin of -2.51% is in-line with the industry average.
KORS's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying
that there has been very successful management of debt levels. Although the company had a strong
debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
Q4 -0.17
The company, on the basis of change in net income from the same quarter one year ago, has significantly
Q1 0.91
Q2 1.00
Q3 1.48
Q4 0.90
Q1 0.87
Q2 1.01
Q3 1.59
Q4 0.98
Q1 0.83
Q2 0.95
Q3 1.64
underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry.
The net income has significantly decreased by 115.1% when compared to the same quarter one year ago,
falling from $177.02 million to -$26.80 million.
2014 2015 2016
NA = not available NM = not meaningful
Net operating cash flow has decreased to $140.90 million or 47.36% when compared to the same quarter last
year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is
1 Compustat fiscal year convention is used for all fundamental
data items. significantly lower.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: August 6, 2017 PAGE 1
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
August 6, 2017
NYSE: KORS

Sector: Consumer Goods & Svcs Apparel, Accessories & Luxury Goods Source: S&P
NA NA 0.09 $5.7 Billion $32.38-$52.67 $36.45
PEER GROUP ANALYSIS INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*
The textiles, apparel, and luxury goods industry includes very well-known brands such as Nike (NKE), Coach
(COH), Luxottica Group (LUX), Ralph Lauren (RL), Fossil (FOSL), Under Armour (UA), HanesBrands (HBI),
350%
GIL
Columbia Sportswear (COLM), Crocs (CROX), and Movado Group (MOV).
FA
VO
The companies in the textiles, apparel, and luxury goods industry sell their products through multiline
RA
BL
retailers and over the internet. Some of the larger players in this industry group cross over into the specialty
E
retailer category with exclusively branded stores of their own such as Nike, Coach, Fossil, and Ralph Lauren.
While textiles may have once been a large portion of this industry group, that segment is down to a few
players such as Unifi (UFI), Culp (CFI), and Crown Crafts (CRWS). Most of the industry is focused on brands for
Revenue Growth (TTM)
shoes, clothing, eyewear, and wrist watches. Companies in the group tend to own a variety of proprietary
brands in order to design, develop, market, and distribute products targeted to specific consumer segments.
UN
FA
UA
VO
CRI LULU PEER GROUP: Textiles, Apparel & Luxury Goods

-50%
UAA HBI
RA
GIII
KORS
B
OXM Recent Market Price/ Net Sales Net Income

LE
0% RL 22.5% Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)
EBITDA Margin (TTM) KORS MICHAEL KORS HOLDINGS LTD 36.45 5,680 11.22 4,493.70 552.50
Companies with higher EBITDA margins and HBI HANESBRANDS INC 23.84 8,689 15.68 6,363.29 574.12
revenue growth rates are outperforming companies LULU LULULEMON ATHLETICA INC 60.50 7,679 28.67 2,369.18 289.29
with lower EBITDA margins and revenue growth UAA UNDER ARMOUR INC 18.31 6,996 38.15 4,982.43 216.87
rates. Companies for this scatter plot have a market UA UNDER ARMOUR INC 16.34 6,996 34.04 4,982.43 216.87
capitalization between $1 Billion and $8.7 Billion. GIL GILDAN ACTIVEWEAR INC 30.04 6,763 19.13 2,657.14 366.92
Companies with NA or NM values do not appear.
CRI CARTER'S INC 89.67 4,289 17.62 3,304.48 252.52
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization. RL RALPH LAUREN CORP 76.05 4,212 NM 6,652.80 -99.30
COLM COLUMBIA SPORTSWEAR CO 58.86 4,100 21.64 2,417.05 192.77
REVENUE GROWTH AND EARNINGS YIELD
GIII G-III APPAREL GROUP LTD 26.54 1,291 31.60 2,458.07 38.78
350%
GIL OXM OXFORD INDUSTRIES INC 62.31 1,047 20.17 1,052.60 49.48
The peer group comparison is based on Major Apparel, Accessories & Luxury Goods companies of comparable size.
FA
VO
RA
BL
E
Revenue Growth (TTM)
UN
FA
LULU
VO
-50%
UAA UA OXM HBI

RA
GIII COLM
B
RL CRI
LE
-2%
KORS
10%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -10.2% and
347.9%. Companies with NA or NM values do not
appear.
August 6, 2017
NYSE: KORS

NA NA 0.09 $5.7 Billion $32.38-$52.67 $36.45
COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Michael Kors Holdings Limited design, markets, Below is a summary of the major fundamental and technical factors we consider when determining our
distributes, and retails branded women's apparel and overall recommendation of KORS shares. It is provided in order to give you a deeper understanding of our
accessories, and men's apparel. The company operates rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
in three segments: Retail, Wholesale, and Licensing. The important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
Retail segment is involved in the sale of women's understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
apparel; men's apparel; accessories, which include valuation. Please refer to our Valuation section on page 5 for further information.
handbags and small leather goods, such as wallets;
footwear; and licensed products comprising watches, FACTOR SCORE
jewelry, fragrances, beauty products, and eyewear. It
operates collection stores and lifestyle stores, including Growth out of 5 stars 1.5
concessions and outlet stores. As of April 1, 2017, this Measures the growth of both the company's income statement and weak strong
segment operated 398 retail stores in the United States, cash flow. On this factor, KORS has a growth score better than 20% of
Canada, and Latin America, including concessions; and the stocks we rate.
429 international retail stores, including concessions in
Europe and Asia, as well as e-commerce sites in the
United States, Canada, France, Germany, Italy, Spain,
Total Return out of 5 stars 1.0
Switzerland, the United Kingdom, China, and Japan. The Measures the historical price movement of the stock. The stock weak strong
Wholesale segment sells accessories, such as handbags performance of this company has beaten 10% of the companies we
and small leather goods, footwear, and women's and cover.
men's apparel to department stores and specialty shops
in the United States, Canada, Latin America, Europe, and Efficiency out of 5 stars 5.0
Asia. The Licensing segment licenses its trademarks on Measures the strength and historic growth of a company's return on weak strong
products, such as fragrances, beauty, eyewear, belts, invested capital. The company has generated more income per dollar of
cold weather accessories, jewelry, watches, coats, men's capital than 90% of the companies we review.
suits, swimwear, socks, furs, and ties, as well as
licenses rights to third parties to sell the company's
products in various geographical regions, such as Brazil,
Price volatility out of 5 stars 1.0
the Middle East, Eastern Europe, Asia, and Australia. The Measures the volatility of the company's stock price historically. The weak strong
company sells its products under the names of MICHAEL stock is less volatile than 10% of the stocks we monitor.
KORS, MICHAEL MICHAEL KORS, and various other
related trademarks and logos. Michael Kors Holdings Solvency out of 5 stars 4.0
Limited was founded in 1981 and is based in London, the Measures the solvency of the company based on several ratios. The weak strong
United Kingdom. company is more solvent than 70% of the companies we analyze.
MICHAEL KORS HOLDINGS LTD Income out of 5 stars 0.5

33 Kingsway
Measures dividend yield and payouts to shareholders. This company weak strong
London WC2B6UF
pays no dividends.
VGB
Phone: 44 20 7632 860
http://www.michaelkors.com THESTREET RATINGS RESEARCH METHODOLOGY
Employees: 14000
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
August 6, 2017
NYSE: KORS

NA NA 0.09 $5.7 Billion $32.38-$52.67 $36.45
Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

IBES consensus estimates are provided by Thomson Financial MICHAEL KORS HOLDINGS LTD's gross profit margin for the fourth quarter of its fiscal year 2016 is essentially
unchanged when compared to the same period a year ago. Sales and net income have dropped,
underperforming the average competitor within its industry. MICHAEL KORS HOLDINGS LTD has weak
liquidity. Currently, the Quick Ratio is 0.90 which shows a lack of ability to cover short-term cash needs. The
company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.
During the same period, stockholders' equity ("net worth") has decreased by 20.19% from the same quarter
0.62 last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial
3.57 E 3.65 E difficulties could develop in the future.
Q1 FY17 2018(E) 2019(E)
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Q4 FY16 Q4 FY15
Net Sales ($mil) 1,064.80 1,198.67
EBITDA ($mil) 14.70 294.55
EBIT ($mil) -42.60 244.08
Net Income ($mil) -26.80 177.02
BALANCE SHEET
Q4 FY16 Q4 FY15
Cash & Equiv. ($mil) 229.60 702.00
Total Assets ($mil) 2,409.60 2,566.80
Total Debt ($mil) 133.10 2.30
Equity ($mil) 1,592.60 1,995.70
PROFITABILITY
Q4 FY16 Q4 FY15
Gross Profit Margin 58.20% 58.16%
EBITDA Margin 1.38% 24.57%
Operating Margin -4.00% 20.36%
Sales Turnover 1.86 1.84
Return on Assets 22.92% 32.69%
Return on Equity 34.69% 42.04%
DEBT
Q4 FY16 Q4 FY15
Current Ratio 2.06 3.83
Debt/Capital 0.08 0.00
Interest Expense NA 0.58
Interest Coverage NA 417.95
SHARE DATA
Q4 FY16 Q4 FY15
Shares outstanding (mil) 156 176
Div / share 0.00 0.00
EPS -0.17 0.98
Book value / share 10.22 11.31
Institutional Own % NA NA
Avg Daily Volume 2,522,814 2,688,203
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
August 6, 2017
NYSE: KORS

NA NA 0.09 $5.7 Billion $32.38-$52.67 $36.45
RATINGS HISTORY VALUATION

Our rating for MICHAEL KORS HOLDINGS LTD has HOLD. MICHAEL KORS HOLDINGS LTD's P/E ratio indicates a significant discount compared to an average of
not changed since 5/20/2016. As of 8/3/2017, the 24.86 for the Textiles, Apparel & Luxury Goods industry and a significant discount compared to the S&P 500
stock was trading at a price of $36.45 which is average of 24.65. Conducting a second comparison, its price-to-book ratio of 3.57 indicates a premium versus
30.8% below its 52-week high of $52.67 and 12.6% the S&P 500 average of 3.07 and a significant discount versus the industry average of 5.89. The price-to-sales
above its 52-week low of $32.38. ratio is well below both the S&P 500 average and the industry average, indicating a discount. Upon
assessment of these and other key valuation criteria, MICHAEL KORS HOLDINGS LTD proves to trade at a
2 Year Chart discount to investment alternatives within the industry.
$60
HOLD: $38.71
BUY: $49.14
HOLD: $41.55
Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5
$50 premium discount premium discount
KORS 11.22 Peers 24.86 KORS 5.53 Peers 19.92
$40 • Discount. A lower P/E ratio than its peers can • Discount. The P/CF ratio, a stock’s price divided by
signify a less expensive stock or lower growth the company's cash flow from operations, is useful
expectations. for comparing companies with different capital
2015 2016 • KORS is trading at a significant discount to its requirements or financing structures.
peers. • KORS is trading at a significant discount to its
peers.
MOST RECENT RATINGS CHANGES
Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5
Date Price Action From To premium discount premium discount
5/20/16 $41.55 Downgrade Buy Hold KORS 9.99 Peers 21.26 KORS 1.34 Peers 2.23
2/11/16 $49.14 Upgrade Hold Buy • Discount. A lower price-to-projected earnings ratio • Discount. The PEG ratio is the stock’s P/E divided
8/3/15 $38.71 No Change Hold Hold than its peers can signify a less expensive stock or by the consensus estimate of long-term earnings
Price reflects the closing price as of the date listed, if available lower future growth expectations. growth. Faster growth can justify higher price
• KORS is trading at a significant discount to its multiples.
peers. • KORS trades at a significant discount to its peers.
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5
premium discount lower higher
(as of 8/3/2017)
KORS 3.57 Peers 5.89 KORS -26.97 Peers 14.49
44.47% Buy - We believe that this stock has the • Discount. A lower price-to-book ratio makes a • Lower. Elevated earnings growth rates can lead to
opportunity to appreciate and produce a total return of stock more attractive to investors seeking stocks capital appreciation and justify higher
more than 10% over the next 12 months. with lower market values per dollar of equity on the price-to-earnings ratios.
balance sheet. • However, KORS is expected to significantly trail its
30.17% Hold - We do not believe this stock offers • KORS is trading at a significant discount to its peers on the basis of its earnings growth rate.
conclusive evidence to warrant the purchase or sale of peers.
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
Price/Sales 1 2 3 4 5 Sales Growth 1 2 3 4 5
premium discount lower higher
KORS 1.26 Peers 2.24 KORS -4.64 Peers 16.39
25.37% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with • Discount. In the absence of P/E and P/B multiples, • Lower. A sales growth rate that trails the industry
the risk involved too great to compensate for any the price-to-sales ratio can display the value implies that a company is losing market share.
possible returns. investors are placing on each dollar of sales. • KORS significantly trails its peers on the basis of
• KORS is trading at a significant discount to its sales growth
industry on this measurement.
TheStreet Ratings
14 Wall Street, 15th Floor DISCLAIMER:
New York, NY 10005
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TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
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August 6, 2017

MICHAEL KORS HOLDINGS LTD

STOCK PERFORMANCE (%) 45

RETURN ON EQUITY (%) Volume in Millions

MICHAEL KORS HOLDINGS LTD

PEER GROUP ANALYSIS INDUSTRY ANALYSIS

CRI LULU PEER GROUP: Textiles, Apparel & Luxury Goods

OXM Recent Market Price/ Net Sales Net Income

UAA UA OXM HBI

MICHAEL KORS HOLDINGS LTD

COMPANY DESCRIPTION STOCK-AT-A-GLANCE

MICHAEL KORS HOLDINGS LTD Income out of 5 stars 0.5

MICHAEL KORS HOLDINGS LTD

Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

MICHAEL KORS HOLDINGS LTD

RATINGS HISTORY VALUATION

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