Bloomberg explains that Michael Kors has so far spread “aggressively” and has often been criticized for it: now that the brand is expanded and popular across America it may be difficult to get the perception of that exclusivity back.
Also for Bloomberg , frequent discounts on products have been damaging to the image and perception of quality : not only have prices been lowered by authorized dealers who sometimes sell the brand together with others in the departments of some department stores, but Michael Kors’ stores themselves have tried to lower prices to compete with each other in sales.
The risk is that it will happen what happened to Coach who extended his chain of outlets (stores where he sold older collections at discounted prices) until it came to represent about 70 percent of his sales and then chose to resize it. Instead, Kors hopes to keep sales through its outlets at around a quarter of the total.
Commenting on the economic data for the second quarter of 2015, Michael Kors, who is the creative director and founder of the brand, explained in a conference call with analysts that at the moment the company and its collaborators are cutting prices to get rid of the arrears of old collections. and that in the second half of the year Kors will try to improve the online sector to increase sales. At the moment Michael Kors sells from his website only in America, while in Europe he relies on stores like Zalando or Yoox, and has always preferred to invest in physical stores rather than on the internet.
In any case, thanks to the opening of stores also in other continents and not only in North America, where the risk of saturating the market is high, in the second quarter of 2015 Michael Kors’ revenues grew by 6.9 percent, up to at $ 1.13 billion: better than analysts’ forecast of $ 1.08 billion, although the company said costs related to online trading and opening new stores weighed on internal forecasts, which were even more optimistic.