KORS: We’re adding this name to our LONG Bench for the first time. While we had been much more inclined on the short side, the 43% relative draw down over the past year is too good to pass up for a quality company, management team and brand like this. To be clear, we’re not looking at this name as a multi-year double/triple like KATE or RH. But 20-30% returns aren’t half bad, either. We’ve spent a lot of time on the road year-to-date, and too many people speak about KORS like it is the next Coach (i.e. on its way to the brand equivalent of Jurassic Park). We couldn’t disagree more. If anything, it is going the way of Ralph Lauren – perhaps not the best example given RL’s challenges right now. But RL has grown into a global luxury brand with a $15bn footprint. KORS is currently sitting at just $6.4bn. Can it get to $10bn in 3-years? It’s very possible. But the bigger question is whether the next move is to $8bn or below $6bn in 2015. We think it’s the former. With the stock trading at a mid-teens multiple with 13% of the float short, this is the kind of name we like betting on.
We’ll be back with more analysis as we take the name more rigorously through our investment process.