Having spent more than three decades climbing to the top of the fashion world, the designer Michael Kors could hardly be described as an overnight success.
But it has taken only 14 months, coupled with Wall Street’s buoyant capital markets, for Mr. Kors to become enormously rich.
Since December 2011, when Michael Kors Holdings went public, Mr. Kors has sold about 17 million shares of stock. His latest sale of about 3 million shares came on Thursday as part of the company’s third so-called secondary stock offering since its initial public offering. Mr. Kors still holds about 2.5 percent of the company, or about 4.9 million shares, down from his roughly 12 percent stake at its I.P.O.
All told, Mr. Kors has sold roughly $650 million worth of his company’s stock, and retains a roughly $300 million stake. Not bad fora Fashion Institute of Technology dropout.
Mr. Kors and his financial backers (more on them later) have exploited Michael Kors’s strong financial performance and soaring stock price to cash out of their holdings. The company’s shares have more than tripled since the I.P.O. Mr. Kors and the other insiders have now sold big blocks of stock at four different times, each time higher than the previous sale.
Yet last week, Michael Kors reported another excellent earnings report and the promise of continued growth. “Another stellar quarter . . . Michael, you’re the man!†exclaimed Randal Konik, an analyst for Jefferies, who raised his price target on the company’s stock to $80 a share.
Brian J. Tunick, a JPMorgan analyst, increased his estimates, noting “the company’s strong brand momentum and seasoned management team are extremely well positioned to continue gaining market share in the global accessories market.†Mr. Tunick contrasted Michael Kors’s strong numbers with the weak financial results posted by its archrival Coach, underscoring Michael Kors dominance of the “affordable luxury†category.
“We belive that the Michael Kors brand is ideally positioned within the global luxury lifestyle market and we look forward to delivering on our long-term objectives,†said John D. Idol, the company’s chairman and chief executive.
Yet Mr. Idol, who has run the company since 2003, has also been eagerly selling his holdings. After Thursday’s sale of about two million shares, Mr. Idol, a veteran fashion executive who previously served in senior posts at Ralph Lauren and Donna Karan, will have sold more than $400 million of shares owned by him and his family. He retains a roughly one percent stake in the company.
But the money raised by Mr. Kors and Mr. Idol look modest compared with that of of Michael Kors’s private equity investors, Lawrence S. Stroll and Silas K. F. Chou. Mr. Stroll, a Canadian, and Mr. Chou, a Hong Kong resident, are a pair of fashion-industry tycoons who run Sportswear Holdings Limited, which acquired the Michael Kors company in 2003 for about $100 millio! n.
! Heading into the I.P.O., Mr. Stroll and Mr. Chou controlled slightly more than half of Michael Kors. On Thursday, they sold about two-thirds of their remaining stake, and now own about six percent of the company. They have sold roughly $3 billion worth of shares over the past 14 months.
The aggressive cash-outs by Mr. Kors and his business partners has always been part of the bear case on Michael Kors. But so far, anyone who has resisted buying the company’s stock has rued that decision. Yet with this latest round of sales, investors appear concerned. Michael Kors shares, which peaked at $65 a share on Tuesday, have dropped nearly 10 percent since share sale was announced.
