Changes are coming to Michael Kors. In light of continued sales woes and weaker than expected third quarter sales, and paired with concerns that the company's efforts to reinvigorate its brand are taking much longer than expected, the New York-based brand has announced that it will reduce promotional activity across retail and wholesale channels in the U.S.
According to CEO John Idol, the brand will significantly increase digital marketing to further fuel its fast-growing ecommerce business globally. It’s impending cut-down promotional activity in retail and wholesale channels is expected to hurt net sales in 2018, says Idol, but such declines are expected to moderate in 2019.
Sales have been weaker than anticipated in North America and Europe and will continue in thein vein, according to the brand, at least partly due to fewer shoppers visiting malls. Sales will also be impacted by anticipated market volatility in Europe throughout the calendar year.
In addition to its shift in marketing – which Idol does not “believe any of our competitors are taking this level of stance as it relates to walking away from the promotional activity" – Kors says it plans to increase penetration of footwear in its most0visited stores. The company also plans to roll out a new online dress shop, which is scheduled to launch this fall; it is focused expanding its dresses and menswear divisions. Moreover, the brand is looking to invest in its online business and reduce supplies to department stores, which have been discounting heavily to bring back shoppers.
Despite the aforementioned goals, not everyone is convinced that the brand is headed for positive results in the near future. "As much as we believe that Michael Kors is headed in the right direction ... we maintain our view that it has much more work to do in reconnecting with customers who have been alienated by the overexpansion of the brand," Neil Saunders, managing director of research firm GlobalData Retail, told Reuters.