Michael Kors to focus on quality after sales dip
08/02/2017
This came off the back of a 6.9% dip in comparable sales, a much larger drop than the brand had expected.
Retail sales increased 9.2% to $836.7 million, but this was driven primarily by the opening of 143 new stores associated with the company’s recent acquisitions of previously licensed operations in China and South Korea.
Revenue from the Americas decreased 7.4% and sales in Europe fell 7%. John Idol, chairman and CEO of Michael Kors, said the brand was “disappointed” with the comparable store sales in these regions, He predicted that the difficulties are likely to continue during Spring 2017 due to reduced traffic in shopping malls, currency fluctuations, uncertainty surrounding political changes in Europe and reduced promotional efforts in North America.
Sales in Asia jumped 89.1% to $112.3 million, driven by the aforementioned acquisitions. Mr Idol said the company believes this region offers a “$1 billion opportunity” in the long term.
In a conference call with investors, he announced plans to improve the quality the brand’s handbags and accessories in order to sell more full-price goods. This represents a move away its recent focus on high volume low-end products.
"Their unique and innovative techniques, including artisanal craftsmanship, iconic hardware details and intricate mixed-media leather will enhance glamorous handbag offerings," he said.
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