Keeping Time: Smartwatch Category May Keep Michael Kors Ticking

Reluctant To Read Too Much Into Smartwatch's Showing

The firm expects to keep a good handle on the potential for this category during the holiday period. Nevertheless, the firm noted that growth in this category could not offset the decline in the fashion watch business. Given that fitness tracker is a one-time buy, the firm said it is reluctant to read too much into this category.

2Q Beats, But Guidance Sore

BMO noted that the company's second-quarter adjusted earnings per share beat estimates, while its third-quarter guidance was downbeat, with the headwinds associated with the pulling back on the wholesale channel likely to hurt performance.

Staying Sidelined

BMO recommends staying on the sidelines on Michael Kors until the green shoots of lower promotions are picked up in its proprietary BBD data. The firm believes putting the paste of accessibility back into the tube of luxury is a difficult process and will require patience.

The firm has a Market Perform Rating and a $46 price target for the shares of Michael Kors.

At last check, Michael Kors was slumping 7.9 percent to $47.68.