Michael Kors: Fashion Forward IPO

Kors strikes gold

Turn on CNBC or log into your favorite news site and you’ll read about “hot”  IPOs and the “cool” entrepreneurs behind them. Chances are these whiz kids are in the tech industry and founded their companies over the last few years; the companies have experienced exceptional growth and demand for their stock making instant dollar billionaires of many founders. Think LinkedIn, Pandora, and the upcoming Facebook IPO.

But another IPO can compete with the tech hype: Michael Kors Holdings (NYSE:KORS). For as much difference between KORS and your typical high-flying tech IPO, there are more similarities than you may first imagine.

Take the name behind the brand: Honorary Chairman, Chief Creative Officer and Director, Michael Kors. Michael (yes, it’s ok to call him that) is an entrepreneur in every sense of the word. Born and raised on Long Island, Michael learned fashion at a very young age from his mother, a former Revlon model. By the time he was ten, he was designing clothes for other kids in his neighborhood, and selling them out of his basement. He moved to New York City to attend the Fashion Institute of Technology, but dropped out after two semesters. When he was 19, he went to work for a well-known French boutique in midtown which allowed him to design and merchandise his first fashion collection. At 21, he launched the Michael Kors Women’s Collection which was sold in high-end department stores such as Saks Fifth Avenue and Berdgorf Goodman. That was over thirty years ago.

Over the past three decades, Michael has built the company into a successful global luxury lifestyle brand. I challenge you to walk down Fifth Avenue in New York City or Main Street USA and not bump into a stylish person wearing a piece designed by Michael Kors. Michael has been the recipient of numerous industry awards including the CFDA Womenswear Designer of the Year in 1999, Menswear Designer of the Year in 2003, and The Accessories Council ACE Award for Designer of the Year in 2006. In 2010, the CFDA acknowledged Mr. Kors with their most prestigious honor, the Lifetime Achievement Award. In addition to all of these accomplishments, from 1998 to 2004, Michael also served as creative director of Celine, the renowned French luxury brand. Since 2004, you have seen him as a judge on the hit Emmy-nominated reality show, Project Runway, advising up and coming designers on their designs.

Though Michael's company has been around since 1981, it was through the support of a team of private equity investors in 2003 that it was launched into the brand that we see today and includes the Michael Kors luxury collection and the MICHAEL Michael Kors accessible luxury collection. The company has successfully expanded beyond apparel into accessories (including handbags, small leather goods, eyewear, jewelry and watches) and footwear. It has a presence in 74 countries with 169 retail locations in North America and 34 internationally. KORS generates wholesale sales through approximately 1,801 department stores and specialty stores in North America and an additional 549 internationally.

Exceptional growth, you ask? KORS experienced year-over-year total revenue growth of 58.1% and 28.0% in Fiscal 2011 and Fiscal 2010, respectively, with total revenue in fiscal 2011 of $803 million. Global comparable store sales increased 48.2% and 19.2% in Fiscal 2011 and Fiscal 2010, respectively. Global retail store count grew from 48 at the beginning of Fiscal 2009 to 166 through the end of Fiscal 2011, representing a 51.2% CAGR.

The result: one of the hottest IPO listings in 2011. KORS priced above the range and also upsized the deal, raising a greater-than-expected $944 million, making this the largest IPO ever in US fashion. KORS rose 21% on its first day; year to date (February 7th) the stock is up 20%. The NYSE listing on December 31 was one of our most fashionable, celebrated by the company’s investors, management, and of course, Michael Kors. 

One of my favorite moments in December was Michael posing with his mother in front of the KORS banner displayed on the iconic NYSE façade. I was also touched by how he honored each executive individually for their contributions - and also by the tears shed on the NYSE Trading Floor when the stock first opened and the American Dream was realized. Oh heck, let’s be honest. It was during breakfast when Michael complemented my outfit (which, of course, he designed). Priceless! And definitely up there with the best of the best tech IPOs.