Michael Kors shares plunged more than 15 percent after the handbag maker recorded weaker sales at its retail stores in Europe during the fiscal second quarter, making this the first time in almost two years that Kors missed analysts' quarterly revenue expectations.
Michael Kors reported earnings of 91 cents a share, down from $1.32 a share a year ago, and revenue of $1.25 billion, missing estimates of $1.26 billion.
To makes things worse, a strategy blunder was mentioned during the earnings call whereby CEO John Idol said that sales were lower because the company didn't have enough inventory of its logo bags.
The company acquired Jimmy Choo last year and announced this fall that it is buying Versace for $2.4 billion.
When the Versace news broke out, analysts argued that KORS overpaid Versace. The Italian fashion brand was barely profitable and investors were fearful that the new acquisition could destroy shareholder value.
Since Kors announced the acquisition of Versace, the stock price declined by 18% and following the earnings announcement, the price dropped by a further 15%!
At the current price levels, I think that investors now feel that they have insulated themselves from the expensive Versace deal and might provide a good buying opportunity.
The share price is now on a support level which acted as a resistance/supportway back in December 2016.
Various oscillatorsare also looking really good for a purchase.