Fashion Designer Michael Kors Eyes Sale of Stake for up to $500 Million

NEW YORK – Fashion designer Michael Kors, which has become a household name thanks to its founder's role as judge on reality TV show Project Runway, is looking to raise as much as $500 million via a sale of a stake in his company to raise money for global expansion plans, the New York Post reported Monday.

The company could sell a stake of about 25 percent in the coming months in what would be one of the fashion industry’s largest deals of recent years, the paper said, citing sources. If the designer sold a 25 percent stake for $500 million, the deal would value Michael Kors at $2 billion, twice the company's annual revenue.

When looking at the value in terms of a multiple of annual earnings before interest, taxes, depreciation and amortization, a method Wall Street often uses, Kors would be valued higher than Italian fashion giant Prada, which went public this month on the Hong Kong stock exchange.
"I think you could argue that Michael Kors deserves a richer valuation because they've got a lot more room to grow in places like Europe and Asia," Robert Burke, president of Robert Burke Associates, a consulting firm to the luxury industry, told the Post.

Michael Kors has more than doubled in size over the past four years and has continued to post profits, it said. The growth has come after fashion financiers Silas Chou and Lawrence Stroll, who took Tommy Hilfiger public in the 1990s, invested $100 million in Michael Kors to take a majority stake in 2003.

The Post cited a source as saying that they are exploring an IPO for Kors "sometime in the next few years.”