Shares of Michael Kors Holdings Ltd. are falling in premarket trading Friday as one of its principal founding stockholders is selling its remaining shares in the luxury retailer.
Michael Kors said that Sportswear Holdings Ltd. is offering about 11.6 million shares in a secondary public offering. Michael Kors, which makes handbags, clothing and accessories, won't receive any proceeds from the sale. Sportswear had a 5.7 percent stake in the company.
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Sportswear is a holding company that has previously made investments in brands such as Tommy Hilfiger and Polo Ralph Lauren Europe. It is controlled by Silas Chou and Lawrence Stroll, former co-chairmen of Tommy Hilfiger. Chou and Stroll are original majority shareholders of Michael Kors.
In January 2003 Chou and Stroll purchased a stake in Michael Kors from luxury goods company LVMH Moet Hennessy Louis Vuitton. They also purchased a stake in Kors from John Orchulli, former co-chairman and CEO of Kors, and Onward Kashiyama U.S.A. Inc., which has made apparel for the Kors by Michael Kors line.
Last year Sportswear Holdings participated in a secondary offering in which it sold off the majority of its stake in Michael Kors.
Michael Kors said Thursday that Chou and Stroll will resign from its board once the latest secondary offering closes. At that point, Michael Kors' board will contain seven directors.
Chou and Stroll will continue to have an ownership stake in Michael Kors Far East Holdings Ltd.
Michael Kors Holdings has been on the radar of investors ever since it debuted on the New York Stock Exchange in late 2011. Its shares have more than tripled since that time, thanks to strong demand for its goods in various markets.
Shares of Michael Kors Holdings declined $3.67, or 4.6 percent, to $76.30 before the market open.