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The fashion designer Michael Kors Outlet is seeking a luxury price tag on his stock. His company’s initial public offering, expected this week, would value it at up to $3.6 billion. The metrics are in line with Prada, which listed earlier this year. But Michael Kors Holdings may struggle to sustain the growth needed to stay in style with investors.
Kors may be right that there is still room for significant expansion in the United States. But familiar territory will eventually offer diminishing returns. And abroad, different customer tastes might mean lower profitability.
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Just as the Italy-based Prada capitalized on Asian market interest by listing in Hong Kong, American investors may be eager to buy into an all-American, fast-growing brand. But insiders are selling, and the supermodel Heidi Klum, host of “Project Runway,” has some advice that might suit investors in Michael Kors Outlet UK, whose namesake is a judge on the show. Each week she reminds competing designers that “in fashion, one day you’re in, and the next day you’re out.”
Mr. Kors, who owns about 2 percent of Michael Kors Holdings, saw his estimated net worth cross the billion-dollar mark on Tuesday as the company’s stock price rose more than 17 percent. He joins a small club of billionaires of the fashion world, including Tory Burch and Sara Blakely, the creator of Spanx, according to Forbes.
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Wall Street has been so good to Mr. Kors, a native of Long Island, that other brand-name fashion designers have begun to follow in his footsteps, Peter Lattman reported in DealBook last year.
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The billionaire status of Mr. Kors was reported earlier by Bloomberg News. A spokeswoman for Michael Kors Outlet Sale declined to comment.
(..updated july 29th 2008)
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