From the Wall Street Journal:
Michael Kors to Shut 100 to 125 Stores
The closings of full-price retail stores to occur over the next two years
By Imani Moise
May 31, 2017
Michael Kors Holdings Ltd. KORS -1.33%said Wednesday that it would close 100 to 125 of its full-priced retail stores amid increasing pressure from deep discounting across the industry.
The luxury-handbag seller said the closures of its full-price retail stores would occur over the next two years and the company expects to record a $125 million charge in connection with its plans.
“Our product and store experience did not sufficiently engage and excite consumers,” Chief Executive John Idol said.
Like its peers, Michael Kors has beenstruggling to sell its bags at full price since shoppers have gotten used to deep discounts at department stores and competitors. The company has been trying to turn its brand around by reducing the flow of goods to department stores and focusing on higher quality products to persuade customers to spend more money.
The London-based company expects the move will “right-size” its fleet and produce $60 million in annual savings. However, the company said 2018 will be a transition year before it returns to long-term growth.
The company said sales for the current quarter will be between $910 million and $930 million, compared with the consensus estimate of $941.3 million from analysts polled by Thomson Reuters. Its full-year revenue estimate was more than $100 million below analysts’ expectations.
Shares plunged 7.9% to $33.42 during premarket trading, adding to a 16% decline so far this year.
For the quarter ended April 1, the company swung to a $26.8 million loss, or 17 cents per share, compared with a profit of $176.3 million, or 98 cents per share, a year earlier. On an adjusted basis the company earned 73 cents per share, down from $1.03 a year earlier. Revenue slid 11% to $1.06 billion.
Analysts had projected adjusted earnings of 70 cents per share on $1.05 billion in sales.
Michael Kors to Shut 100 to 125 Stores
The closings of full-price retail stores to occur over the next two years
By Imani Moise
May 31, 2017
Michael Kors Holdings Ltd. KORS -1.33%said Wednesday that it would close 100 to 125 of its full-priced retail stores amid increasing pressure from deep discounting across the industry.
The luxury-handbag seller said the closures of its full-price retail stores would occur over the next two years and the company expects to record a $125 million charge in connection with its plans.
“Our product and store experience did not sufficiently engage and excite consumers,” Chief Executive John Idol said.
Like its peers, Michael Kors has beenstruggling to sell its bags at full price since shoppers have gotten used to deep discounts at department stores and competitors. The company has been trying to turn its brand around by reducing the flow of goods to department stores and focusing on higher quality products to persuade customers to spend more money.
The London-based company expects the move will “right-size” its fleet and produce $60 million in annual savings. However, the company said 2018 will be a transition year before it returns to long-term growth.
The company said sales for the current quarter will be between $910 million and $930 million, compared with the consensus estimate of $941.3 million from analysts polled by Thomson Reuters. Its full-year revenue estimate was more than $100 million below analysts’ expectations.
Shares plunged 7.9% to $33.42 during premarket trading, adding to a 16% decline so far this year.
For the quarter ended April 1, the company swung to a $26.8 million loss, or 17 cents per share, compared with a profit of $176.3 million, or 98 cents per share, a year earlier. On an adjusted basis the company earned 73 cents per share, down from $1.03 a year earlier. Revenue slid 11% to $1.06 billion.
Analysts had projected adjusted earnings of 70 cents per share on $1.05 billion in sales.