Kors' IPO is a fashion-forward success

Michael Kors understands what fashion-conscious shoppers desire. Apparently he knows what investors want, too.

The designer's company, Michael Kors Holdings Ltd., raised $944 million after selling 47.2 million shares in its initial public stock offering Wednesday night, valuing the company at $3.8 billion. It had planned to sell about 42 million shares for between $17 and $19. But as with demand for some of Kors' designs, investors clamored for more, and that helped push the price to $20 per share.

Shares closed their first day of trading Thursday at $24.20.

The success of the Michael Kors IPO is a testament to the designer's popularity and the resilience of well-to-do shoppers in an otherwise weak economy. It also defies a soft year for companies looking to raise money through new offerings of stock. And for Kors personally it means a payday of more than $100 million.

"The IPO market has not shown grandiose returns, but this was on everyone's buy list," said Scott Sweet, a senior managing partner at IPOBoutique.com.

Kors is an American designer who became a household name in recent years as a judge on fashion design competition show "Project Runway." He has been among the top names in fashion for years, dressing countless celebrities, and even first lady Michelle Obama, in his signature simple style with a hint of high-fashion glitz.

The company, based in Hong Kong, makes high-end handbags, shoes and clothing that it sells at its own shops and through other retailers. A Michael Kors crocodile handbag can run more than $2,000 and a halter dress more than $7,000, but the bulk of its business is centered on more affordable luxuries for well-off shoppers such as $300 sunglasses and $600 purses.

While most consumers are feeling the drag of the economy, wealthy shoppers in the United States and abroad are spending more freely. In 2011 U.S. retail sales of luxury items are up more than 5 percent from a mid-recession low in September 2009, according to an estimate by MasterCard SpendingPulse.

Michael Kors has been one of the beneficiaries of that spending. The company's net income soared 85 percent to $56.9 million in the 2011 fiscal year, and its sales increased 58 percent to $803.3 million in 2011. Sales at stores open at least a year, considered a key indicator of a retailer's performance, jumped 31 percent during the first two months of its third quarter, which ended Nov. 26. The company operates 184 stores in North America and 37 internationally.