NEW YORK (TheStreet) -- Shares of Michael Kors (KORS) fell 4.68% to $76.23 in morning trading Friday after the company announced the pricing of its secondary offering of common stock by its largest shareholder Sportswear Holdings, which will sell a stake valued at approximately $930 million.
The luxury brand priced 11,629,627 shares of $76.75 a share. The company will not receive any proceeds from the offering, which it expects to close on or around September 10.
Michael Kors also announced after the market closed Thursday that Lawrence Stroll and Silas Chou would resign from the board of directors as of the date the offer closes. The board will have seven members, five of whom are independent, after they resign.
"Over the past 10 years, Michael Kors has become one of the leading luxury brands in the world," said CEO and Chairman John D. Idol. "The vision for this success has been shared and supported by Lawrence Stroll and Silas Chou, as original majority shareholders of the company.
"We look forward to our continued business relationship with them through their ownership interest in Michael Kors Far East Holdings Limited. On behalf of Michael, myself and our entire Board, I would like to thank Lawrence and Silas for their significant contributions to our success. We believe we have a bright future ahead with continued opportunity for growth."
More than 4.3 million shares had changed hands as of 9:58 a.m., compared to the average volume of 3,509,180.
Separately, TheStreet Ratings team rates MICHAEL KORS HOLDINGS LTD as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICHAEL KORS HOLDINGS LTD (KORS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 43.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- KORS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.20, which clearly demonstrates the ability to cover short-term cash needs.
- MICHAEL KORS HOLDINGS LTD has improved earnings per share by 49.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MICHAEL KORS HOLDINGS LTD increased its bottom line by earning $3.21 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $3.21).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 50.2% when compared to the same quarter one year prior, rising from $125.00 million to $187.72 million.
- The gross profit margin for MICHAEL KORS HOLDINGS LTD is rather high; currently it is at 62.19%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.42% significantly outperformed against the industry average.
- You can view the full analysis from the report here: KORS Ratings Report