Michael Kors Enters Into Partnership With British F1 Team

In an effort to globalize its brand and to attract more European customers Michael Kors Holdings Limited’s (NYSE:KORS) has entered into a partnership with British Formula One team, McLaren-Honda. Per the agreement, the company will now be the official lifestyle partner of the team.

The Michael Kors branding will be seen in both the McLaren-Honda Formula 1 driver overalls as well as the McLaren-Honda MP4-31 car. The company will also design a limited-edition men’s black leather jacket as part of the deal. These jackets will contain both brands’ logos and a plaque with each piece having a distinctive production number.

The company is pretty confident about the success of the partnership and expects the deal to help it grow as a men’s lifestyle brand.

In order to drive top-line growth, Michael Kors has been focusing on store expansion. In fiscal 2016, the company opened 142 new stores, which included 47 in the Americas and 95 worldwide. At the end of the quarter, the company had 869 stores across the globe, which included licensed locations. In fiscal 2017, the company is expected to open 15 stores in Americas, 40 in Asia and 20 in Europe.

Given the scope for high profitability from company-owned stores, management is putting more emphasis on opening retail stores. The company also concentrates on expanding men’s business either through standalone stores or by adding men's offering to the existing lifestyle outlets in North America, Europe and Asia. Michael Kors continues to see opportunity for 500 men’s stores globally, and plans to open 150 men's shop-in-shops worldwide in fiscal 2017. We believe that these initiatives will help to drive the company's revenues higher.

Zacks Rank & Stocks to Consider

Michael Kors currently has a Zacks rank #3 (Hold). Some better-ranked stocks in the retail sector include Delta Apparel Inc. (NYSE:DLA) , Perry Ellis International Inc. (NASDAQ:PERY) and Hanesbrands Inc. (NYSE:HBI) . Delta Apparel sports a Zacks Rank #1 (Strong Buy), while Perry Ellis International and Hanesbrands hold a Zacks Rank #2 (Buy).