Upon the release of its earnings result, Michael Kors Holdings just announced that it will close around 125 store branches worldwide to combat its weakening sales. The luxury fashion retailer stated that its sales at several branches have dramatically plummeted in its newest quarter which as a result upset its shareholders with not just sales, but most of its current quarter estimations.
“Our product and store experience did not sufficiently engage and excite consumers,” John Idol, Chairman and Chief Executive of Kors, told reports. “We need to take further steps to elevate the level of fashion innovation in our accessories assortments and enhance our store experience,” Idol explained further.
The company has also said that, going forward, it will concentrate more on the burgeoning markets in Asia.
It wasn’t long ago that the company was “one of the most robust growth stories in retail with four years of 25 percent” annual sales growth, according to Wells Fargo analyst Ike Boruchow.
In the fourth quarter of the current fiscal year, Total sales have deeply fallen to 11.2 percent, to $1.1 billion, while comparable store sales demolished down to 14.1 percent.
Also in the quarter, the fashion firm plunged up to $26.8 million on its net income in contrast to $177 million of last year.
As for the coming year, Kors’ administration likewise provided an austere viewpoint in terms of its earnings.
Idol accused the establishment’s performance on the “difficult retail environment” in which publicity value has dashed down the trademark’s prestige. However, corporate specialists blamed the business’s forceful expansion otherwise, which erected 960 Michael Kors stores internationally.
“When the brand was just sold in department stores, it did phenomenally well, When they decided to become a stand-alone retailer, everything changed.” Farla Efros, a retail consultant, told reports.
The mass terminations are likely to save the business a $60 million value of cash.
Although, the demand for handbags rallied and drove Michael Kors’ upsurge over the past decades, the handbag sector has unfortunately lost its drive. Meanwhile, Coach, one of Kors’ leading rival, has managed to pick itself way back up from a sharp decline to four sequential quarters of comparable sales development.
Kors deeply plunged on its most recent trading session. The fashion retail opened trades for the first day of June at 33.22 and closed down to 33.08 with a high of 33.58 and a low of 32.46.
As for its indicators, Kors’ RSI level was seen below the 30’s range, specifically at 26.99 while its Coppock curve went further down to -11.24 - a negative region indicating a sell for the fashion retail.
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