Michael Kors Will Close 100 Stores To Avoid Risks

Another retailer decided to department stores During the great depression, the store closed the door. Michael Kors decided to close 100-125 full price retail stores in the next two years. Light luxury brand It is hard to escape from the vicious circle of "rapid decline in performance after the popularity".

According to the world clothing shoes and hats net, today, the American luxury brand. Michael Kors In the 2017 quarter of fiscal fourth and the financial report for the whole year, the total revenue of MK in the fourth quarter was $1 billion 60 million, down 11.2% from the same period last year. The net loss was 26 million 800 thousand US dollars, compared with the net profit of 177 million US dollars in the same period last year. Gross profit fell 11.1% to 619 million dollars. MK's comparable sales in the fourth quarter are also down, down 13.6% from a year ago, which is even worse than analysts estimated 12.4%.

From the regional perspective, sales in the US and Canada dropped by 18% to $721 million in the main markets of the company and 15.3% in Europe compared with the same period last year. The only growth in the region was Asia's sales of over 120 million US dollars, up 96.3% from the same period last year.

The group is also not confident in the first quarter of this year (fiscal year 2018) and expects revenue to be further reduced, from $910 million to $930 million. MK has decided to close 100-125 retail stores in the next two years to improve its profitability.

The closed stores will be full price shops, and will not cover the main discount shops. The store is expected to save $60 million a year for MK, saving 125 million dollars in two years. The company's chairman and CEO John D.Idol said in its earnings report that the 2018 fiscal year will be the most critical year for the group. At present, the attractiveness of MK stores and products to consumers has obviously declined. The group needs to think of ways to enhance the quality of brand stores and products.

In 2014 -2015, the MK luxury brand suddenly became a fire, sweeping the same level of Tory Burch, Kate Spade and Coach brands. Apart from fashion design and high cost performance, consumers enjoy their products. Crazy shop expansion (department stores and discount villages) also contributed a lot to the growth of its sales performance.

Now the myth of sales has been shattered, not only has its performance declined, but also its share price has fallen by 31% compared with the highest. The situation is strange. The electricity supplier and the economic situation are not good enough to blame the declining trend of the retail department store industry. Of course, MK itself can not get away from it. It has taken the old road of Coach - rapid expansion and crazy discount.

MK currently has more than 4000 stores in the world, compared with less than 3000 in 2013, and the degree of its opening up is comparable to that of H&M. Although the sale of brands has increased, the number of comparable sales has declined over the past two years. Expansion is bound to mean a rise in store costs and an increase in inventory levels, which will compress brand profits.

In the long run, crazy expansion brings more damage to the brand. It was originally a light luxury brand with a little high driving force. As a result, the streets and lanes were full of shops, and then walked down the altar. At first, consumers will also have a sense of popularity for the brand because of their products. But with the brand everywhere, everyone can have it, consumers will feel tired, and the brand will quickly lose its value and lifestyle.

In terms of discount, MK is also ruthless. Usually, the products of the discount village in the United States may be half or even 1/3 of the original price of the counter. The discount village has seriously affected the pricing strategy and the initiative of bargaining. Pricing at different levels will create a competitive situation and gradually swallow up high-end product lines. Consumers who are cheaply discounted for long periods of time are naturally unwilling to spend two times the price to buy the full package of the brand.

In addition, in terms of design, MK innovation is becoming less and less. The wallet and backpack style that MK sees in stores every year is almost the same. It is still popular killer killers and smiley face packages a few years ago. The main and discount items are always those, and fake products are becoming more and more popular.

Neil Saunders, director of global data retailing, believes that MK's past expansion and wild discounts hurt the brand image and the earliest consumers. While running all the way, MK rarely looks at brands, examines consumers, and does not necessarily set up effective "new life" plans in the future.

Especially in the United States, the other two big luxury Kate Spade and Coach have formed a big change of family and luxury. Coach is rebounding strongly, from closing stores to performance to double digit growth, regaining consumers' preference and bargaining power.

Winning the Kate Spade can help the group get the love of the younger generation of consumers. The rise of Coach and Kate Spade will continue to occupy the market share of MK. This is not good news for MK who is still alone.

In 2014, in the face of MK's massive attack, Coach had no way to resist and could only swallow the bitter fruit of that year. In 2017, Coach was resurrected and was beaten by MK. MK can not avoid Coach's mistake, but can she copy the myth of Coach returning to its peak?

More interesting reports, please pay attention to the world clothing shoes and hats net.