Michael Kors closes 125 stores, the Odyssey of US Retail continues

06 Jun 2017

Michael Kors, one of the most important international fashion brands, has announced the closure 125 stores in the last few days. The company hopes that this will lead to annual savings of $60 million. The decision was based on the last quarter’s revenues, including licenses, which fell 11.2% to $1.06 billion. In the same period, the total sales for both stores and digital commerce fell by 14.1%. The net loss for Michael Kors is $27 million. CEO John D. Idol admitted that Michael Kors's "product and shop" experience is currently not in line with the brand’s tradition or consumers’ expectations, and has warned that the 2018 fiscal year will be a transitional year. While expanding the company's perfumes and wearables could help its recovery, Michael Kors is suffering the consequences of having expanded its distribution network. As a result, the company has rescaled sales in department stores in an attempt to combat the decline in profitability that was determined by excessive promotional pressure.   Retail figures have been terrible. "An increase of 0.5% of total sales may seem like an acceptable result but, when placed in the context of the 159 stores added in the last year, this is actually rather unsatisfactory," Idol said. "It is clear that in the short run, sales will decrease further as the group strives to find its place in the market. It is painful to have to restructure, but we must focus on the brand’s reconstruction." Today, Michael Kors has two main goals: improving the level of innovation in its offer and the customer's in-store purchasing experience. The latter especially seems to be a distinctive hardship in the sector: Abercrombie Fitch, Aeropostale, American Apparel, Land's End and Ralph Lauren have all joined the crisis of the major US general retailers, which are currently engaged in an unprecedented drive to restructure their business.