Tags: Kors | iPO | Shares

Kors Raises $944 Million in IPO, Pricing Shares Above Range

Thursday, 15 Dec 2011 09:36 AM

Michael Kors Holdings Ltd., the clothing company founded by the designer of that name, raised $944 million in an initial public offering, 19 percent more than it sought, after pricing its shares above the marketed range.

The company sold 47.2 million shares for $20 apiece, according to a statement yesterday, after offering 41.7 million shares on behalf of existing shareholders for $17 to $19 each. The stock will start trading today on the New York Stock Exchange today under the symbol KORS.

Kors Holdings, whose sales surged more than 60 percent in the first half, plans to more than double the number of its stores over the “long term,” according to a regulatory filing. The company, founded in 1981, also has opportunities to license the Kors brand, said Steven Dennis, founder of the luxury consulting firm Sageberry Consulting LLC.

“It’s a very solid business and it has been growing really, really nicely,” said Dennis, who is based in Dallas. “They have a number of growth opportunities ahead of them.”

Michael Kors himself, the largest individual investor, planned to trim his stake to 8.6 percent from about 12 percent, according to the original terms of the offering. Sportswear Holdings Ltd., the largest shareholder, planned to cut its stake to 38 percent from 52 percent, while Chief Executive Officer John Idol intended to reduce his stake to 5.1 percent. Kors Holdings didn’t plan to sell any shares in the offering.

Coach, Ralph Lauren

Laurence Stroll and Silas Chou, of Sportswear Holdings, helped develop the Tommy Hilfiger brand, and Idol previously ran Donna Karan International Inc.

“They are super operators, they know how to build brands,” said Marc Cooper, head of the retail practice at New York-based investment bank Peter J. Solomon Co.

The company also benefits from more affordable pricing and more easily wearable -- “safe” -- fashions than some designers, according to Sageberry Consulting’s Dennis. Michael Kors handbags can be purchased in the $400 range, compared with at least $800 for Prada and other designer labels, he said.

The midpoint of the proposed price range valued Kors Holdings at more than $3.4 billion, or 3.4 times trailing 12- month sales through Oct. 1, according to the prospectus. Coach Inc. trades at 4.1 times sales over the same period, and Ralph Lauren Corp. is at about 2 times sales.

Europe, Japan

Kors Holdings’ sales increased to $548.7 million in the six months through Oct. 1 from $340.9 million a year earlier. Net income in the fiscal year ended April 2 jumped 85 percent to $72.5 million. Kors Holdings operated 184 North American stores and shops within department stores as of Nov. 26, and 37 in Europe and Japan, according to the prospectus.

While Kors Holdings has principal executive offices in Hong Kong, designer Kors, who is the chief creative officer, leads a New York-based team that is responsible for the company’s products. Michael Kors also is a judge on the fashion-design show “Project Runway” with model Heidi Klum.

Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. managed the offering.

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