Fashion is fickle, and the designer Michael Kors understands
that better than anyone. The Long Island designer became a
household name as a star judge on the show Project Runway, where
every week supermodel Heidi Klum pronounced someone "in" and
That may explain why Michael Kors has been selling shares in
his namesake company, Michael Kors (
), the luxury lifestyle fashion house that went public last
December. Here's a stock chart of how it has done since then,
compared to competitor Ralph Lauren (
The company makes apparel, handbags, shoes and everything else
for people who have what it calls the "jet-set aesthetic." It
also has 237 stores. Its last fiscal year, which ended in March,
it made $248 million on $1.3 billion in sales. That was up from
$137 million on $803 million the prior year. It had 57.8% gross
profit, up from 55.5% the prior year.
KORS Gross Profit Margin
But Kors, who is honorary chairman and chief creative officer,
has so far netted more than $467 million on stock sales, the
Wall Street Journal
reported. Other insiders have been selling too, including
chairman and chief executive John Idol.
The company's annual filing (although Kors is a Long Island
boy, the company's a foreign issuer) makes clear it's an
unpredictable business, and apparently one that doesn't get a
whole lot in writing. It doesn't have written agreements with its
wholesale customers, they buy order by order. It doesn't have
agreements with its third-party manufacturing contractors,
either. Nor does it have written agreements with the agents it
uses to source goods with manufacturing contractors, not even
with the Hong Kong agent responsible for sourcing 17% of its
purchases of finished goods.
In addition to that, Kors is basically waiting for its
customers to turn up their noses at any moment. The company says
it has to correctly gauge consumer needs and fashion trends, and
"even if we react appropriately to changes in fashion trends and
consumer preferences, consumers may consider our brand image to
be outdated or associate our brand with styles that are no longer
popular or trend-setting."
Tough business. Well, if there's anything more fickle than
fashion, it's the stock market.
From the editors of YCharts.
YCharts Pro Investor Service