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The Deal: Searching for the Next Michael Kors at Fashion Week

Stocks in this article: KORS RL PVH COH

The team of investors behind the company -- CEO John Idol, Silas Chou and Lawrence Stroll -- previously engineered the success of Tommy Hilfiger Corp., which went public in 1992 and eventually made its way into the hands of clothing conglomerate PVH Corp (PVH). In 2003 Sportswear Holdings Ltd., owned by Stroll and Chou, acquired an 85% stake in Michael Kors for $100 million, buying out LVMH, Onward Kashiyama Co. Ltd., and John Orchulli, Kors' business partner.

Michael Kors' market cap is a multiple of Ebitda (earnings before interest, taxes, depreciation and amortization) that is more akin to that of a high-tech growth giant than the rag trade. For the 12 months as of June 29, Michael Kors had Ebitda of $770 million and an enterprise value of $14.3 billion, equating to a multiple of nearly 18.6 times.

That's the success that has investors crawling all over the Fashion Week tents wondering who could be transformed into the next hit.

Of course, blockbuster fashion brands are not necessarily new. Designer Ralph Lauren probably created what was the first true powerhouse fashion apparel brand, raking in billions in market value over the years after his Ralph Lauren Corp. began trading on the public markets in 1997. Today that company is also worth nearly $15 billion.

The multibillion-dollar market cap serves to reinforce the Ralph Lauren image of other-worldly wealth and privilege based on a fantasy of American aristocracy and old money with influence from the British.

When PVH acquired the much-coveted Calvin Klein brand, with its aesthetic of sleek modern minimalism -- and then Tommy Hilfiger, a competitor and copier of Ralph Lauren, followed by the rest of Calvin Klein it did not own with the acquisition of Warnaco Group Inc. -- the company transformed itself from a stodgy maker of men's dress shirts into a clothing giant.

The successful powerhouse brands may ooze luxury, but their businesses are built on selling accessible aspirational products to the masses.

For Michael Kors, that means accessories, with handbags costing perhaps a few hundred dollars apiece on average. Expensive enough to seem a splurge for most people but not so expensive as to limit the brand's market to the 1%.

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