The future of Michael Kors looks uncertain. According to Reuters, shares’ have plummeted by around 15%! Other analysts reviews show slightly different data, but all of them agree on the fact that profits are falling and the future looks bleak. Is this the end of “affordable luxury”, and the demise of Michael Kors?
One main reason for the drop in Kors’ numbers is the reduced traffic trends in suburban shopping malls (Financial Times). Although this has affected other retailers, the impact on Kors has been higher, reducing its profits by 2.4% compared to last year. It is interesting to point out that the recent recession has hit both the American and European markets hard, but the Asian market has been largely unaffected, evidenced by the fact that in the last 9 months of 2016, it increased its turnover to 87.4% (Modaes).
Another factor contributing to Kors’ poor performance has been the big promotion campaign they’ve undertaken, they have dramatically reduced their average selling prices. Not only this, but shopping habits have transitioned to “cheaper cross-body bags and small leather goods” (Reuters), displacing their previous best selling iconic $300 bag.
Consequently, the company is trying to work their way back to the top: they have extended their portfolio to dresses and menswear and are building a stronger online business presence. However, their alternative future may prove more interesting. LVMH (Louis Vuitton Moet Hennessy), the French luxury good conglomerate may acquire Michael Kors for $10,000 million, making each share $50.5 worth, 3 dollars more expensive than their actual value. The acquisition is being discussed at the moment. Michael Kors will be under the same house of Dior, Givenchy, Loewe and many others.
Nevertheless, according to research conducted in October 2016, Leeds is the top choice in the UK for growing brands, where Kors is included. The opening of Trinity in 2013 and now Victoria Gate offers a good environment for these retailers (The Yorkshire Evening Post). Around campus we could see the cross-body Michael Kors bags in different colours including a jazzy light blue. However, Kors has found a very strong competitor; there is strong trend between Leeds students carrying the Herschel bags in its different forms: from the plain black bag to the bigger rucksack with straps. Leeds’s students have made their choice, but it is just fashion or has Kors indeed lost his presence?
By Gema Sancho-miñana
(Photo From: Index Informations)