Shares of design house Michael Kors (NYS: KORS) popped on the open today, with the stock climbing more than 5%. The luxury-goods retailer reported fiscal fourth-quarter earnings that beat on both the top and bottom lines. Let's take a closer look to see what the numbers tell us about the company's long-term potential.

Stay the Kors
For the quarter, net income came in at $43.6 million or $0.21 a share, ahead of analyst estimates of $0.16 a share. Revenue shot up 58% to $380 million, up from $240 million in the year-ago period. Meanwhile, the Street was expecting revenue of $360 million. Retail net sales also soared -- increasing more than 80% thanks to 71 new store openings -- not to mention, same-store-sales enjoyed a boost of 36% in the quarter.

Additionally, management raised its guidance for the current quarter. The luxury lifestyle brand now expects a 35% jump in comparable-store sales for the period. I see a multiyear growth story here that is just getting started.


It's difficult to find any sour notes in the retailer's earnings. However, the company has a little exposure to Europe, which could put pressure on the stock over the short-term. Fortunately it's a small amount, and the region still saw comparable-store sales grow 14% for the quarter.

Competitive landscape
Since going public last year, the stock has showed impressive price performance. In fact, shares are up more than 45% year to date. Let's see how Michael Kors' closest competitors measure up in terms of share price.

KORS Chart

KORS data by YCharts

Clearly, Michael Kors is one of high-end fashion's winners, and this momentum shows no signs of slowing. True, the stock trades at a P/E of 61, which is rich particularly when compared to those of industry peers. Coach (NYS: COH) , which directly competes with Kors in accessories and leather goods, will cost you around $61 a share, on a P/E of 18. Lifestyle retailer Ralph Lauren (NYS: RL) trades at $140 a share, with a P/E of 19. And Tiffany (NYS: TIF) comes to the table with a share price of $54 and a P/E of 16. While these retailers have more favorable valuations, none come close to Michael Kors' aggressive revenue growth.  

A shiny future
The namesake company enjoys strong demand for its products, which I think will continue to boost sales in the quarters ahead. Michael Kors' business gets a big win from accessories, which include higher-margin items such as the brand's popular chronograph watches. The real growth driver for the company, though, is success from its Michael selection of less expensive apparel.

In fact, this segment of lower-priced wear contributes around 90% of the company's total revenue. By positioning itself as an affordable luxury brand, Kors gains access to a broader customer base. In addition to the 301 Kors retail stores worldwide, the brand is also sold in more than 2,300 department stores and boutiques around the world.

Good buy
To keep its upscale image afloat, the company recently opened its biggest store yet on Madison Avenue in New York City. The new digs include 6,655 square feet of retail space complete with soaring 22-foot ceilings. Selling to the full scope of prices and customers continues to be a key ingredient in the company's growth strategy going forward. This is one of the ways in which Kors has been able to outpace competitors such as Tiffany, which is confined to the high-end consumer.

Expanding into China presents ano ther solid growth opportunity for the designer. Similar to other luxury retailers, Kors plans to double its presence there by the end of 2012. Given these catalysts I suspect the momentum will carry throughout fiscal 2013.

If you already own shares of Michael Kors or if you're looking for another can't-miss growth stock, then you'll want to read The Motley Fool's latest free report. In it you will discover two stocks that are changing the face of retail and reaping the rewards along the way. Click here to get your free copy now.

At the time this article was published Fool contributor Tamara Rutter does not own shares of any companies mentioned in this column. Follow her on Twitter, where she uses the handle @TamaraRutter, for more Foolish insights and investing advice. Motley Fool newsletter services have recommended buying shares of Coach. Motley Fool newsletter services have recommended shorting Tiffany. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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