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It appears KORS, if it can sustain its current trajectory, can easily beat the 9.8% implied growth rate from the DCF calculation. Conversely, RL will need to adjust its business model to attain its implied valuation. 2. Comparable Store Sales Analyzing comparable store sales will help us determine if growth is attained through store count expansion or through additional demand. Higher comparable store sales show that each store is generating more revenue, which is much more sustainable for growth. Michael Kors has achieved very high samestore sales growth, while Coach and Ralph Lauren are lagging. By analyzing the number of stores each retailer has, it is clear that KORS is expanding the most, increasing its store count significantly. This trend will likely continue as KORS' cashflow from operations increases (223% increase in CFO since 2011). In 2013, RL's revenues increased only 2.9% due to the closing of 867 stores and a 3% increase in comparable store sales. If this trend continues, RL will eventually experience negative topline growth. Similarly, COH is shutting down its stores, though growth is primarily driven through internet sales.
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