Michael Kors Holdings is a prime representative of the luxury sector thanks to its world renowned products like accessories, watches, and handbags. The enterprise went to great length since its opening year in 1981, and it now owns 550 stores and 1500 boutiques around the world. Despite the growth efforts, the sophisticated apparel maker had a worse year than its lowest predictions for quarterly sales. In light of this shadowed evolution, the company adjusted its expectations for 2017 at a more modest level.
The number of sales for the third quarter brought disappointment for Michael Kors especially from two of its markets in Europe and North America. The company expects the same markets to extend their low performance all the way till spring. This is because the traffic in key shopping centers is low while the European countries are struggling with political changes. Moreover, the company is going to withdraw most of its promotional offers from North America which will result in an even more decreased number of sales.
As most countries from North America and Europe represent the strength of the target public, Michael Kors will probably not show great signs of improvement this year. The low expectations are also harming the investors in the luxury sector. Thus, the shares of the fashion company dropped by 11% early Tuesday morning which marked the 52nd lowest week for Michael Kors Holdings.
This was not the first company affected by a weaker luxury sector. After 22 months of activity for the high-end jewelry retailer, Frederic Cumenal resigned from his position as the CEO of Tiffany & Co. of his own accord. The reason behind this sudden decision is a disappointing financial performance recorded during the busiest shopping time of the year. This is not a singular event. Stefan Larsson stepped down last week as the CEO of Ralph Lauren Corp. due to same reasons.
Once December 31st ended, the revenue for Michael Kors stopped at $1.35 billion after three months of winter holiday activity. This is a sudden decrease from the previous $1.4 billion revenue, even though the analysts were expecting such weak results. Asia welcomed the new Michael Kors operations in China and South Korea after the company invested heavily in this market. However, this market alone was not enough to make up for the struggling times in North America and Europe.
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