This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How To Find the Next Michael Kors

NEW YORK (TheStreet) -- "One minute you're in, the next you're out," Heidi Klum says in Project Runway.

That's a fashion and retail concept many in the securities business just don't get. And investors would be wise to understand the fickle nature of the fashion world, where an upstart can topple a well-known brand in a matter of months.

That's why Coach (COH) shareholders were caught by surprise with the drop in the company's stock and the rise of Michael Kors (KORS). Simply put: Coach is out, Kors is in.

You can rattle off all the numbers you want about Coach -- I hear the same ones with Tiffany (TIF) too. Store expansion, China, new styles, etc. But it doesn't change the fact that Coach is out. It is no longer aspirational. Who doesn't own a Coach bag -- or two or three? Coach is for sale at outlet stores with inexpensive versions of its own quality product, which obviously cheapens the brand.

One thing about luxury goods is that the buyer perceives she is getting something special. Coach is no longer special. Kors, however, is. The handbags aren't priced like Gucci or Vuitton, so it is accessible, but consumers feel that buying a Kors bag is a step above Coach. That is why the stock of Kors is doing so well and Coach isn't. It has nothing to do with quality or the numbers -- it's fashion. The fact that Kors is now worth $12 billion and was one of the top 10 IPOs of 2012 has hungry investors shopping around for the next Michael Kors.

The next Kors is Tory -- Tory Burch. Tory Burch, for the uninitiated, is preppy. Burch grabbed women's attention with a ballet flat decorated with the signature "T" logo, and it went from there. The company is now worth over $3.3 billion. Founder Tory Burch's 28% stake is said to be worth $935 million. Ralph Lauren (RL) and Tommy Hilfiger (PVH) are classic preppy, but neither have the feminine flair that has made Tory Burch so popular. The company hasn't filed for an IPO, but that is mostly because of a nasty divorce between Tory Burch and Christopher Burch that was resolved in 2012. Mr. Burch owned too much stock and had too much say, even though the couple was separated. Tory Burch is now free to move forward and the IPO market is salivating.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,915.07 -70.54 -0.42%
S&P 500 1,964.68 -8.15 -0.41%
NASDAQ 4,396.2040 -22.83 -0.52%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs