Michael Kors IPO Hits a Home Run

Michael Kors Holdings began trading yesterday at a price of $24.75 per share, a day after the company sold 47.2 million shares at a price of $20 a piece. The IPO's proceeds will go directly to shareholders who unloaded their shares. The company hopes to replicate the success of Coach

and Ralph Lauren

who have maintained commercial success since going public with their offerings. Benzinga reached out to retail analyst Brian Sozzi, who often appears on CNBC, for his thoughts on the company's potential. "The stock will generate a lot of interest, as luxury retail investors don't have a lot to choose from. Most investors have been focused on Tiffany & Co

and Coach so far this year, and Michael Kors gives them another name to invest in. The brand targets many upper class shoppers, which has proven successful given the struggles that many middle class buyers face. "Michael Kors has had a lot of success with their entry level handbags which sell for about $300 - $400. They are higher quality than Coach handbags, which has seen quality fall over the last few years as they have moved most of their manufacturing processes to China. A friend of mine recently purchased an $1100 bag from them, and they are having a great deal of success with their high end offerings," added Sozzi. The company has already begun an international expansion, as it has opened stores in Japan. While such a movement could increase long term revenue growth substantially, the expansion could take some time. "Gap's international expansion took a few years. While Kors definitely could succeed in international markets, it could take time. The company also will look to expand its online retail operations. It can't rely on building more flagship stores alone," commented Sozzi. Michael Kors has a very diverse base of buyers, as it sells its products at many different price points. The brand is found at many major retailers including Macy's

, Nordstrom

, and Saks Fifth Avenue

. Sozzi believes that the brand is perfectly positioned and is unlikely to target buyers in lower or higher income brackets in the near term. "There isn't a lot of need for Kors to enter more affordable product markets. While they won't likely make an ultra high end line like Ralph Lauren's Black or Purple label, they can continue to grow at Coach price points." If Michael Kors can continue to produce fashionable items, buyers will support the brand's long term revenue growth. Taking advantage of international expansion opportunities will also aid in the company's growth. Investors have already shown their confidence in the company through the IPO subscription, and the company hopes that shoppers will develop the same loyalty as Coach and Ralph Lauren have established. News of Michael Kors IPO originally broke on Benzinga Pro. For more trading ideas, check it out

.