Michael Kors Is Going Out Of Style
Fashion house Michael Kors Holdings Ltd posted weak financial results for its fourth-quarter earnings.
Shares were down almost 50% from an all-time high of $97.60 a few months ago, with an unexpected 5.8% decline in stores including a 6.7% drop in North America, its biggest market by far. The company posted sales of $1.1 billion, up 17.8% from the previous quarter, and more than the estimate for $1.09 billion. A 1.7% drop in same-store sales excluding currency impact, its first ever while a year ago, same-store sales climbed 26%.
Revenues from the company’s digital business climbed 63 per cent in the year that ended in March from the previous period, aided by the launch of a new online website in the US. The company said its expenses in the current year would rise as it expands its e-commerce business abroad.
In its earnings release John D. Idol, chairman and chief executive officer of Michael Kors, commented on earnings: “Fiscal 2015 marked another year of sales and earnings growth in excess of 30%. While we were faced with a number of headwinds in the fourth quarter, we were pleased with the strong performance across our segments and geographies. We believe that our results demonstrate the strength of the Michael Kors brand as our luxury products continue to resonate with consumers worldwide. Looking at Fiscal 2016, this will be a year of strategic investments as we continue to develop our powerful platform to support the numerous growth initiatives that are now underway.”
Ubiquity is always a problem for high-end labels like Kors and the brand attempted to capitalize on its wave of popularity with aggressive expansion plans and a broader assortment of products to become a so-called “lifestyle” brand. Kors added 121 new stores in the fiscal year that ended March 28 alone, bringing the total to 526. However the fashion accessories and apparel retailer which was the hottest name in affordable luxury a year ago seems to be falling out of fashion. Analysts said Kors’s rapid expansion had led to brand fatigue among shoppers which the brand is learning the hard way.
