The John Idol haters club got what it wanted today, when CPRI announced that Joshua Schulman, formerly CEO of the Coach Brand, will become the new CEO of the Michael Kors brand (currently John Idol, CEO of CPRI serves in that role), and then will succeed Idol as CEO of the parent. The stock caught a nice bid, as the consensus on the buy side is that Idol ran the Kors brand into the ground – and has been widely loathed ever since. While I’m a huge fan of the succession planning, I’m not in the ‘hate Idol’ camp like most of the Street is. The reality is that he did two deals that I think dramatically altered the underlying organic growth, margin and valuation characteristics of the company. He bought Versace for $2.1bn in 2018, and based on the accelerated growth in the brand and the elevated margin profile, we’re arguing that just three years later the brand is worth $3-$4bn, and will be worth ~$7bn in another 3-years. Blame the guy all you want for Kors hitting a wall, but he’s been a solid steward of capital in recent years. Idol is moving to an Executive Chairman role. All in, I’m a fan of the development. It makes it easier for me to sell the idea to instutitional investors who have the name on their ‘no way in hell’ list due to their dislike of Idol, and it also allows Idol to focus on the portfolio, and cash deployment instead of being in the weeds on the Michael Kors brand. Previously, Schulman worked – ironically – at as former CEO of Jimmy Choo, and worked and Neiman Marcus/Bergdorff in addition to Coach. He’s extremely well regarded in the industry, and is a slam dunk hire for CPRI. CPRI remains at the top of our Best Idea Long list, as we think it’s a double over a TAIL duration – even after today’s strength, we’re still buyers.
