Attention Michael Kors fans. You must read this.
It is a very sad 1st of June for Michael Kors, as they announced yesterday (May 31) that they will shutdown up to 125 full-priced stores over the next two years. As a result, the company expects to incur about $100 million to $125 million in one-time charges. Ultimately, the company expects annual savings of $60 million. In the fourth-quarter of 2017, the company recorded impairment charges totaling $193.8 million related to underperforming stores. Michael Kors shares are down 6.8% in Wednesday premarket trading, and shares are down 15.6% for the year so far. The S&P 500 index SPX, -0.05% is up 7.8% for 2017 to date.
Over the past year, the luxury retail sector in the United States and Europe has been broadly hit by a number of factors including terrorism, slowing economy and political uncertainty following Brexit and the Trump presidency. In addition, “deep discounts at department stores and competitors” in the industry have also caused the brand’s profitability to peter.
In order to improve profitability and lower the costs of depreciation and amortization associated with infrastructure, the company decided to close down about 100 to 125 full-price retail stores in the next two years, which it expects to optimize its store fleet and result in an annual saving of $60 million.
John Idol, Chief Executive Officer of the firm, also recognizes the need to further work on product innovation and enhance the store experience (both on and offline) to better serve its increasingly sophisticated customers.
“Looking ahead,” said Idol, “as we expand the fashion innovation in our accessories assortments, right-size our store fleet and elevate our store experience, fiscal 2018 will be a transition year in which we establish a new baseline before returning to long-term growth.”
Michael Kors branch at Bonifacio Central Square Mall, Bonifacio Global City Philippines
2017 is indeed a tough year for most retailers and fashion stores. Last year, another London-based store brand had announced their closure due to dramatic loss.
Will the Michael Kors in the Philippine will be save?
According to our source, Michael Kors in the Philippines will NOT BE AFFECTED because the stores are doing well in the country.
Well, in any case this is the right time to buy those MK limited-edition handbag.
xoxo, Blair
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I better not find one of my MUA dumpster diving lol
ReplyDeleteLOL you are funny!
DeleteI like their tote bag very much. But too expensive.. T_T
ReplyDeleteLOL I know right. But hey check the other branches because they might have a huge sale.
DeleteHeard of the closure and its quite sad that it won't be as available to us as it use to be ☹
ReplyDeleteThey might be closing some full-stores, but if the Michael Kors store is a franchise, then I think it won't be affected.
DeleteHow about Malaysia? Any stores will be closed too?
ReplyDeleteThey haven't specified exactly which branches. However if Michael Kors in Malaysia is not a full store (meaning just a franchise) then its not affected.
DeleteA sad turn of events, indeed. :( I hope they recover because they really do provide quality products.
ReplyDeleteI agree. But with the fast technology, I believe it is good that they will closed some slow-performing branches and give focus on online stores.
DeleteI love Michael kors collection. I think they are focusing more in online sales.
ReplyDeleteExactly. They can't deny that online stores are fastest growing.
DeleteIts really sad to know closure of so many stores. Although they are not in India, but from the photos posted, I loved their handbags for sure..www.mommyinme.com
ReplyDeleteOh there are many beautiful brands from India.
DeleteThe economy is bad, no matter what corner of the map you are from. Here in KL, you could see shops open and close in a period of 3 - 6 months.
ReplyDeleteBack to MK, go and buy the limited ones now darling.
I bet branches will have a midyear SALE!!!!
DeleteThis is sad :( All the best MK
ReplyDeleteThey will be focusing on e-commerce.
DeleteI guess it is hard to compete with all the online and newly emerging fashion sites.
ReplyDeleteChina and India and other Asian countries are doing fast in e-commerce. It is a challenge for them.
DeleteAs a Michael jones lover this worries me ahhhh! Hopefully they don't start shutting down more stores....I usually make around two Michael kors purchases a year! Love that brand
ReplyDeleteHello Ashley,
DeleteDon't worry because there will always be a Michael Kors e-store!
Sounds like it may be time to get some good deals on Michael Kors bags here in the states.
ReplyDeleteHello Saidah!
DeleteLet us know when will be their grand mega sale!
That's so unfortunate for them. I've been lusting after a bag from them for a while and didn't know they had one in BGC. If I make a purchase I'll have to check it out instead of going back to the U.S.
ReplyDeleteYeah you can still shop at Michael Kors at BGC. I believe they are not affected by this change.
Deletewell, this is a business decision that can't be helped. I wonder if Malaysia is spared. Just have to wait and see.
ReplyDeleteYeah better wait. But I heard that only the stores in the EU and west will be affected. We'll see then.
DeleteI'm not surprised, it seems like overpriced stuff in the store. I couldn't imagine spending over $100 on a bag with MKs all over it. That's like free advertising. You want me to carry a bag like that, you pay me ;)
ReplyDeleteLOL this is the comment I LOVE. And you are right!
Deletethey didnt do a great job when it comes to marketing I suppose. It became mainstream and not exclusive anymore thus loosing its edge.
ReplyDeleteOr maybe because they are truly so pricey and many new brands are coming, they can't keep up.
DeleteSad to hear about some of the stores closing. Michael Kors has some really great pieces.
ReplyDeleteI am literally waiting for their MEGA SALE!
DeleteAwh its so sad to see so many big fashion retailers closing- maybe its just not the year for them. Glad to know that MK is not closing in the Philippines though-hopefully things will go on well for them in the years to come.
ReplyDeleteI agree 2017 is a hell for most retailers. But its a challenge, they need to come up with new ideas faster.
Deleteoh my... what could have happened.. sad to see Michael Kors stores closing...
ReplyDeleteProbably because competitors are becoming too advanced that Michael Kors are left out.
Deleteoh wow! this is really sad.. the economy is really affecting everyone!
ReplyDeleteYeah so sad, but actually not at all. Time to visit Michael Kors for their closing sale :)
DeleteThese do look like beautiful handbags. I am not sure my daughter is ready for such a thing although she does have a purse. I am kind of surprised how large it is but she does have it. She just never carries it around anywhere that I know of.
ReplyDeleteYour kid will not be interested for Michael Kors. She is too young. And there are many awesome brands that we will like.
DeleteHow sad, I am not a big MK fan but I know a lot of people love it. this reminds me a lot of a shop in a mall in Panama its so bright and open.
ReplyDeleteOh you better check if Michael Kors in Panama will be affected.
DeleteUghhh I heard about this the other day!!! mk is a favorite of mine so it breaks my heart to hear about these closings
ReplyDeleteHow many MK Bags do you have?
DeleteOh dear that is really upsetting to know that MK is so drastically affected by the economy. I do hope that the one in Singapore doesn't close and hope that this is a right move for the brand.
ReplyDeleteYou better check Emily! But I think MK Singapore would not be affected.
DeleteI love Michael Kors. Sad to see them closing some stores.
ReplyDeleteHello Cynthia. Only some of their physical stores will be closed. Michael Kors will still be available online!
DeleteNever knew about this. Shall we consider it a crisis or such a good move for Michael Kors company? I am sure there is a good reason behind this move.
ReplyDeleteIt is also due to loss of sales since last year. They need to closed other low-performing stores to survive.
Deleteyikes! the economy must be really bad!... there's too many big companies down-sizing or even ultimately shutting everything down...T.T I know two friends who would be super devastated if MK decides to just close the whole thing
ReplyDeleteDon't worry, it won't be the whole company, just some 125 full stores. Anyway e-store will always be there.
DeleteOH ON! Well, at least you'll still see them around. Maybe they're not doing too well with their stand alone store cause no one usually dares to go in on casual basis.
ReplyDeleteExactly Aliza. Thank you for visiting babe.
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