Someone clearly got the memo early that Josh Schulman – the incoming CEO of the Michael Kors brand and soon-to-be CEO of the CPRI parent – was getting pushed out. The separation was not inked until this morning, but clearly word leaked last week, leading to a 21% shellacking in the stock. What we know is this…Schulman and John Idol (CEO) got along great. The market will ‘shoot first’ and think that Idol was threatened by Schulman and pushed him out. That was not the case. Our sense is that this was a rub between Michael Kors and Schulman. As Schulman acclimated to the brand, he wanted to make changes – but that didn’t fly with Michael Kors. To be fair, the brand is currently firing on all cylinders…tiering product by channel, price point, consumer, by category, by geography – taking up price points, lifting margins. Why change what’s working? The reality is that this is a business where personalities are eccentric, and not all fit. We’re absolutely, positively 100% convinced that this does not change the trajectory of the business, or the company hitting our above-consensus numbers. We also think that the company is very close to announcing a new CEO of Versace – though again, like with Kors, we don’t want to see someone come in and change what’s working. Our point here is that this move has zero impact on the fundamentals of the business, but definitely gives the ‘idol haters’ more ammo to throw stones. To that end (whether we like it or not), it also gives activists more ammo to get involved with this name trading at 5x TAIL earnings. It’s simply too cheap, with a catalyst calendar to the upside over a TREND and TAIL duration. See our recent Black Book on CPRI -- Replay Video Link: Click Here
