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Amid declining sales, Michael Kors recently announced it would be closing 100 to 125 of its 827 stores over the next two years. While the closures are expected to save the brand an estimated $60 million per year, the announcement caused the company's stock to fall by 10%. Stock is now down 24% for 2017.
Stories of brick-and-mortar retail's decline are nothing new. However, this announcement comes on the heels of a sizeable number of Michael Kors store openings; the company opened 159 retail locations in 2016. Though it's not clear how those locations performed, sales were down by 14.1% at locations that have been open for at least one year. Total revenue dropped sharply from $1.2 billion to $1.06 billion.
Experts believe the company opened too many new stores too quickly. Attempting to capitalize on the handbag boom earlier this decade, perhaps Michael Kors diluted the luxury cache of its brand.
Meanwhile, CEO John Idol attributed the company's struggles to lackluster shopping experiences. "Our product and store experience did not sufficiently engage and excite consumers," he said in a statement.
"We acknowledge that we need to take further steps to elevate the level of fashion innovation in our accessories assortments and enhance our store experience in order to deepen consumer desire and demand for our products." Looking forward, the company sees 2018 as a "transition year."
What do you think readers? Will Michael Kors be able to bounce back? Sound off in the comments.