TFR | Strategy Consulting

Is Michael Kors a luxury brand any more?

As I mentioned in a previous article about the luxury fashion pyramid , Michael Kors is located in the aspirational luxury segment. But after their uncontrolled growth strategy, betting for every channel, we can argue about it. If you see the same bag many times in your daily life, in different areas and social environments, it´s a mass-market product. Of course, most of them could be fake, but the problem is when you find the same product in different channels with a different price. Luxury is about exclusivity.

The consequences, in the short term are to redefine distribution and pricing strategy (closing stores, franchises, outlet stores…), but something more important and difficult will be to reposition the brand as a luxury brand.

Extract from Retail Dive article:

• Michael Kors on Wednesday said it will shutter between 100 and 125 of its full-price stores over the next two years in order to improve the profitability of its store fleet. As a result, the company expects to incur between $100 million and $125 million of one-time costs, but anticipates annual savings of $60 million, according to a company press release.
• Also on Wednesday the apparel and accessories retailer reported fourth quarter revenue fell 11.2% to $1.06 billion, edging out an analyst forecast cited by Reuters for $1.05 billion. Same-store sales in the quarter fell 14.1% missing the Consensus Metrix estimate cited by Reuters for a 13.4% decline. Q4 direct-to-consumer same-store sales including e-commerce fell 14.1% or 13.6% on a constant-currency basis, the company said. Q4 wholesale net sales fell 22.8% to $456.1 million or 22.3% on a constant currency basis, while licensing revenue fell 6.2% to $33.4 million.

Read more on Retail Dive article, by Daphne Howland.