I have no basis for evaluating how “cool” the brand or company will be. Investors of Michael Kors Holdings Limited right now are wishing that they never invested in a fashion company either. The stock has been plummeting for the last few years from around $100 per share in 2014 to less than half of that today. Why has the company been disappointing investors, and will this trend continue?
Michael Kors Holdings Limited was launched in 2004 and went public in 2011 as a designer and retailer of primarily woman’s handbags, shoes and apparel. Since that time the company has expanded rapidly and now has opened over 500 stores and 1,500 in-store boutiques. The company also wholesales its product to various other retail stores.
In the last few years, the company made a strategic blunder which has affected both its stock price and brand image. The company wanted to expand rapidly so it began selling more and more of its product to department stores and other retailers. However, to quickly sell these items, these other retail stores often discounted the products or placed them “on sale” during various sale events. This first led to diminishing sales at Kors stores, which did not discount products. Next, consumers began to expect Kors items to be discounted, so profit margins dropped. And finally, the Kors image suffered it was losing its high-end luxury brand.
Read more starting with ‘Understanding that the company was on the wrong track, senior management’ at…..
Steer clear of Michael Kors stock, until strategy is redressed