Michael Kors announced some devastating news in the fashion world this week: It would be shutting down at least 100 stores after quarterly results that show its sales are on the decline. In many cases, sales will only fall a small percentage during certain seasons, but this decrease was an astounding 11.2% to $1.06 billion. Over the years, Michael Kors has been doing quite well, reporting an incline from $1.3 billion in annual sales from 2012 to $4.7 billion in 2016. The mind-boggling decline was very unexpected, but the company is attempting to remedy this by closing up to 125 stores or less to improve profitability.
Neil Saunders, CEO of GlobalData Retail (a retail consulting firm) commented on the matter, “Michael Kors’ precipitous drop in sales does very little to reassure that the company’s nascent recovery program is on track.” The reason why he believes sales are dwindling? Many customers are abandoning the bags and switching to other types of handbags due to decreased levels of service and merchandise that have not lived up to its standards in recent years. Many customers are taking this lackluster merchandise as a direct hit and switching because they are feeling uninspired as they used to.
John Idol, the Chairman and Chief Executive of Michael Kors, believes that a way to excite the customers once again is to elevate fashion innovation and take a look at what they can do to enhance a consumer’s visit to one of their stores. These are things that they must consider and work on tediously, as a way to engage with the customers, as many designers must do. Though sales are down, Michael Kors has a chance to rise.
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