Bank Of America Checks Show Outperformance At Michael Kors, Google Trends Sloping Negative

April 15, 2015

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In a report published Tuesday, Bank of America analyst Robert Ohmes detailed recent store checks at Michael Kors Holdings Ltd (NYSE: KORS) are "solid" but Google Trends may be telling a different story.

According to Ohmes, store checks in Atlanta, Georgia, during Spring Break indicated the Michael Kors brand is outperforming its peers due to stronger traffic and lower levels of discounts. However, global year-over-year search growth for "Michael Kors" on Google Trends slowed to just 2.3 percent in the fourth quarter from 25.4 percent a year ago.

Ohmes said that Europe search trends showed "solid" growth, which only partially offset a decline in U.S. searches. Volume of search trends for "Michael Kors" globally, on an absolute basis, still outpaces its peers.

The analyst did suggest that a slowdown in search could be partially attributed to growing possibility of alternative search methods including social media, referral sites (i.e. Pinterest), department store and third-party websites.

Nevertheless, the analyst is now assuming modestly negative same-store sales for the fourth quarter 2015 and first quarter 2016 as the company's brand may be entering a transition phase from "hyper growth" to "sustainable growth."

As such, the analyst made the following revisions to his estimates:

2015 revenue estimates lowered to $4.3581 billion from a previous $4.370.4 billion.
2016 revenue estimates lowered to $5.0797 billion from a previous $5.1331 billion.
2017 revenue estimates lowered to $5.9432 billion from a previous $6.0057 billion.
2015 earnings per share estimates lowered to $4.26 from a previous $4.27.
2016 earnings per share estimates lowered to $4.70 from a previous $4.75.
2017 earnings per share estimates lowered to $5.20 from a previous $5.25.

Shares remain Buy rated with an unchanged $100 price target.