Michael Kors Shares Fell 3% Yesterday.

U.S.A

Michael Kors announced its first quarter 2017 fiscal year report, subject to

Consumer reduction and tourism downturn have led to a sharp decline in group profits.

Michael Kors has a bad start in the new fiscal year, and analysts are pessimistic about its outlook for the 2017 fiscal year.

Investors were disappointed with the results after the earnings announcement.

The share price fell 3% to $48.60 per share.

In the first quarter of July 2nd, the net profit of Michael Kors group fell 15.7% to 147 million US dollars over the same period last year. On the basis of the adjustment, excluding the one-time cost of recycling the franchisee's franchise in China, the net profit was 156 million dollars, and the total revenue increased 0.2% to 987 million 900 thousand US dollars from 986 million US dollars last year, of which net sales rose 1.1% to 957 million 300 thousand US dollars compared with last year.

The overall result is higher than Wall Street's anticipated Michael Kors first quarter total revenue of $953 million.

Michael Kors pointed out that the group has taken some measures to rebuild its brand image. Since last year, it has gradually reduced the proportion of brand in department stores, increased the number of brand Direct stores and focused on the development of e-commerce platform. The group's recycling strategy in mainland China and the launching of specific commodities in designated stores have also effectively promoted the overall performance of the group.

It is reported that the group has withdrawn 145 franchises from South Korea, Greater China and Latin America.

In addition to a 7.6% rise in retail net sales, other sales figures for Michael Kors fell during the quarter, including a year-on-year decline in store sales of 7.4%, lower than analysts' expectations; wholesale net sales fell 7% to $394 million 400 thousand; franchised stores fell 20.9% to 30 million 600 thousand US dollars.

By region, the largest market for brands, the US region's first quarter revenue fell 5% to 690 million 800 thousand US dollars; Europe's revenue grew by 3.3% to 224 million euros; the biggest bright spot was that China's Asian market revenue surged 74.5% to 73 million 100 thousand US dollars, but the market share was still small.

John D. Idol, chief executive of Michael Kors, pointed out that this quarter was mainly affected by the weakness of the city's tourism industry and the continuous decline of the market traffic volume, which had a negative impact on the sales performance of the group. Next, the group will expand the product category for the Asian market, so as to realize the global business expansion.

Michael Kors is pessimistic about the outlook. The group disclosed in its earnings report that total sales revenue for the 2017 fiscal year will remain unchanged from last year, while same store sales will decline.

FactSet analysts predict that the company's total sales revenue in fiscal 2017 will fall by 1% compared with the same period last year, while same store sales will drop by 2.1%.

Michael Kors expects sales in the second quarter to range from $1 billion 70 million to $1 billion 85 million, down from $1 billion 110 million expected by FactSet.

Anna Andreeva, a senior retail analyst at Oppenheimer, said that it now seems that Michael Kors is not only affected by the decline in sales revenue of discount stores, but also by retail resistance resulting from the decrease in tourist arrivals.

It is worth noting that the performance of Michael Kors stores is also declining significantly. Besides, the dependence of the brand on wholesale business will also affect the profitability of the company.

The reduction of consumer spending in American department stores is becoming a headache for light luxury brands. In order to get rid of the embarrassment of over promotion, Michael Kors's competitor Coach will close its 1/4 store in department stores. In the latest quarter's earnings as of July 2nd this year, the sales of Coach in department stores fell by two digits. Affected by this measure, Coach expects that the revenue of 2017 will have some negative effects. Investors also begin to worry about the growth power of Coach. Coach shares fell more than 2% at the closing date of the earnings announcement.

Some analysts believe that Coach and Michael Kors are suffering from frequent discounts in the past few years and a large number of stores that have swallowed up their stores. They have made a classic mistake, that is, using brand reputation to fall into many common pitfalls of rapidly developing retail brands, including rapid business expansion, large number of shops, and the use of discounts to retain customers. The negative effect is that consumers will never pay for the standard price handbags.

Although this trend has attracted the attention and Introspection of the light luxury brand camps, but they are very dependent on the handbag business in the industry is in a recession, it will be very difficult to reverse the situation.