The Value of Michael Kors: $666 Million Man

March 13, 2012

Let's be clear: Michael Kors is on a pretty good run, but it's not that he hasn't had a few disappointments. He, for instance, is not a teacher in Ontario.

So far, they are the real winners in Kors' December IPO. The Ontario Teachers Pension Plan Board was the only named Kors investor that didn't sell stock in the public offering.

And so instead of getting $20 a share -- as Kors himself did when he sold off 5.8 million shares, raising $117 million -- the pension plan's 13.2 million shares are now worth $42.08 each.

Kors, sadly, sold at what now seems to be a low price.

He might have another chance to get a better valuation since he, along with chief executive officer John Idol and backers Silas Chou and Lawrence Stroll, also has a stake in the Michael Kors operations in China, Hong Kong, Macau and Taiwan, which were not part of the IPO.

And he has steady employment.

The designer's contract gives him a job for life, an annual salary of $2.5 million and creative control over products bearing his name, assuming he can stay on the right side of "commercially reasonable." (The Wall Street types apparently don't approve of art for art's sake.) Kors is also eligible for a bonus and certain "perquisites" including life insurance, health club membership, car and driver for business purposes and tax services.

It's not the deal scored by Tommy Hilfiger -- who received 1.5 percent of U.S. revenues over $48 million when his company was public -- but it seems to be enough for Kors to keep the heat on.

If he does have to dip into the piggybank, he still owns 15.8 million shares of the company that bears his name, or 8.3 percent of those outstanding. On paper, that's worth $666.8 million, so he could always buy half a million of his $1,295 shearling racing jackets to keep warm.

That's something, at least.

For more information, visit: http://www.wwd.com/fashion-blogs/michael_kors_the_666_million_m-12-02

Wall Street Dragged Lower

June 15, 2009

U.S. stocks fell broadly on Monday as regional manufacturing data dented optimism about the economy’s health and resource shares fell alongside commodity prices.

Economists had expected to see slight improvement in the New York Fed’s “Empire State” index, but the survey showed the factory sector shrank at a more severe rate in June than the previous month. After a series of signs the economy may be stabilizing, investors are looking for more definitive signals of its improving health.

“The New York manufacturing index hinted that the improvement in economic data may be slowing down after the rapid recovery we’ve seen over the past one to three months,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

The stronger U.S. dollar helped pull the price of oil below $70 a barrel from a near eight-month high. The decline hit energy companies’ shares, including Chevron , down 3 percent at $70.50. The S&P energy index slid 3.3 percent.

The S&P 500 eased off gains of about 40 percent from March’s 12-year low, but was still up about 36 percent from that trough.

The Dow Jones industrial average fell 210.25 points, or 2.39 percent, to 8,589.01. The Standard & Poor’s 500 Index slid 25.74 points, or 2.72 percent, to 920.47. The Nasdaq Composite Index gave up 53.23 points, or 2.86 percent, at 1,805.57.

While the recent run-up in commodity prices had helped stocks extend their rally, there has also been concern that a surge in oil and other commodities could hamper any budding economic recovery. Higher energy costs are a drag on consumer spending and corporate profits.

Also dampening sentiment, Goldman Sachs cut its rating on Wal-Mart Stores Inc to “neutral” from “buy,” saying it did not see a lot of positive catalysts to drive shares higher in the near-term as expense pressures and tougher sales comparisons persist.

The Dow component fell 2.9 percent to $48.42, and was among the top drags on the index. The S&P’s retail index fell 2.3 percent.

Technology shares, which have been among the biggest gainers in the three-month market rally, also fell heavily as investors took profits. The PHLX semiconductor index fell 2.2 percent. Shares of tech bellwethers, such as Qualcomm Inc , down 4.4 percent at $44.04, led the Nasdaq lower.

For further information, visit: http://www.publicbroadcasting.net/wned/news.newsmain/article/0/0/1518117/Business/Economy.concerns..commodities.drag.Wall.St.lower

According to the Stocks, the Worst of the Recession is Over

May 26, 2009

A more upbeat mood among consumers is spreading to Wall Street.

Stocks jumped Tuesday after a research group reported consumer sentiment rose in May to the highest level since September.

The Conference Board’s Consumer Confidence Index vaulted to 54.9 from 40.8 last month, soaring past the 42.3 figure that economists surveyed by Thomson Reuters were expecting.

Investors watch that indicator closely to get a sense of whether consumers may start shopping more or making bigger purchases such as cars and homes, which could help get the economy going again. Spending by consumers makes up more than two-thirds of U.S. economic activity.

Stocks had opened lower after North Korea reportedly defied the United Nations by firing two short-range missiles after detonating a nuclear bomb underground on Monday. The U.N. Security Council condemned the test.

Jim King, chief investment officer at National Penn Investors Trust Co., said the improvement in consumer confidence surprised investors. With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy.

“I think the consumer confidence figure is one that no one really pinned a lot of hopes on as going higher,” he said.

In midday trading, the Dow Jones industrial average rose 175.62, or 2.1 percent, to 8,452.94. The Standard & Poor’s 500 index rose 19.27, or 2.2 percent, to 906.27, and the Nasdaq composite index rose 52.60, or 3.1 percent, to 1,744.61.

Stocks dependent on strong consumer spending jumped. Macy’s Inc. (M, News) rose 52 cents, or 4.7 percent, to $11.71, while Best Buy Co. (BBY, News) advanced $2, or 5.7 percent, to $37.18. Home builder KB Home rose 76 cents, or 5.2 percent, to $15.40.

The gains in home builder stocks came as investors shook off a mostly downbeat reading on the housing market. S&P/Case Shiller reported a 18.7 percent drop in its March home price index. The decrease was a little bigger than in February, and slightly larger than economists predicted.

Investors have been questioning whether the stock market’s massive two-month rally can be sustained given the continuing weakness in the global economy. The Dow is still up 26.4 percent from its 12-year low hit on March 9.

After mixed economic data over the last couple weeks, as well as a huge number of stock offerings by banks, the market is likely to stay volatile in the coming weeks, said Steven Goldman, chief market strategist at Weeden & Co. “The market’s had a pretty huge gain here,” he said.

Last week, the major market indexes ended modestly higher, but only after seesawing on worries about the economy and banks.

This week, the market is not only hoping for signs of global stability, but also watching General Motors Corp. (GM, News) as the automaker’s June 1 restructuring deadline approaches. GM is expected to close more plants and force more employee concessions as it tries to avoid bankruptcy court.

On Friday, GM borrowed another $4 billion from the U.S. government, after already received $15.4 billion. GM shares fell 20 cents, or 14 percent, to $1.23.

In other trading, the Russell 2000 index of smaller companies rose 19.02, or 4 percent, to 496.64.

About five stocks rose for every one that fell on the New York Mercantile Exchange, where volume came to 488.3 million shares.

Bond prices fell, pushing the yield on the 10-year Treasury note up to 3.47 percent from 3.46 percent late Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell 7 cents to $61.60 per barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 0.4 percent. In afternoon trading, Britain’s FTSE 100 rose 1.1 percent, Germany’s DAX index rose 1.4 percent, and France’s CAC-40 rose 1.2 percent. For further information, visit: http://www.examiner.com/a-2034924~Stocks_jump_after_consumer_confidence_level_surges.html