So thoughts, especially as Coach has employed many of the turnaround techniques (new design talent, expansion in men's sales, global geographic expansion) that Michael Kors talked about as positives/upcoming initiatives in their conference call?
Two come immediately to mind. First is that Michael Kors is fortunate that it has no net debt and second such turnarounds take time. Look how the Coach share price has waxed and waned over the last year - and this followed a sharp decline over the preceding couple of years. Nevertheless in terms of absolute magnitude of decline Coach has fallen a little over half whilst - as noted above - Michael Kors has fallen around half from its recent (all-time) high. In essence much of what has happened to Coach has been compressed into the sharp fall in the Michael Kors share price in a shorter period of time.
But is Michael Kors cheap? The answer today below US$50 a share is 'yes for a starter position'. If you believe the EPS forecast then the forward EV/ebit of the company is around x7 whilst Coach is still on a low double digit 'recovery' multiple. I own Coach for its recovery prospects from here (c. US$35s share price which it has broadly triple bottomed at) but feel it is correct that this position should also be augmented with one in Michael Kors too at prevailing levels.
Coach is more dividend yield-y but from a total shareholder remuneration perspective Kors has that large share buyback capability to put to work if it wishes to. Coach also has a more Asia-centric sales base but this has been a mild double-edged sword recently.
Net net in the broader retail/pseudo-luxury space at around US$35/US$50 you can make a case for both Coach and Michael Kors. I think you wake up in a couple of years having handsomely beaten underlying broader indices with an investment in one, other or both of these companies. They will bounce along the bottom for a while with - no doubt - some excitable trading updates/quarterly statements (certainly true of Coach over the last year or so!) but are they attractive larger cap value investments today? In my view yes.