Tag Archives: Luxury goods

Michael Kors opened 34 new stores last quarter while foot traffic are declining

Michael Kors peaked in early 2014 and have since then declined in month after month. The stock is trading at about $42 on the last day of May 2016. The outlook for luxury goods has been very disappointing and it still is.

It seems like the consumer spending has been transitioning away from luxury goods to technology and experiences such as food and travel. Michael Kors is a strong brand and still has a strong appeal to the consumers, but the luxury space is struggling to come back.

 

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Long investors think this is a short blip and that the stock will come back, but many people out there belive what we see right now is the new normal. The market for luxury goods have been very disappointing so far this year.

British luxury brand Burberry has declined, and they blame on weak demand in Hong Kong and a drop in tourist spending in Europe. Gap Inc is not better, and their performance can be an indication of incredible softness in the retail industry worldwide.

Nordstrom is also removing Michael Kors handbags from its stores at a rapid space, according to a report from Wedbush. Managers at Nordstrom said declining interest from shoppers for MK products led to the decision.

Not only that. Macys is offering discounts on MK handbags due to oversupply. Furthermore, both Nordstrom and Macys reported weak Q1 earnings due in part to a drop in foot traffic at stores. Just like last year, 2016 will be a challenging year for luxury goods.

Luxury goods sales are expected to rise about 3,5%, from $317 billion to $328 billion.

So far this year, we have also seen losses from luxury retailer Tiffany`s, setting the stage from weakness from Michael Kors, Vera Bradley, and Lululemon over the next week. In an effort to drive top line growth, MK has focused on opening new stores.

Last quarter the company opened 34 new stores, consisting of 15 in the United States and the rest in International markets.

While the new stores will increase operating costs and contract margins, they should help generate higher revenue in the near term.

Global stores should continue to see adverse impacts from weak currency conditions. Regardless, MK continue to deliver positive growth in key financial metrics including revenue, net sales, profits and net income.

The Estimize consensus is calling for earnings of 98 cents per share on $1,156 Billion in revenue, 2 cents higher than Wall Street on the bottom line and right in line on the top. Since the holiday season earnings estimates have fallen 3% while revenue has dropped only 1%.

Year over year comparisons are now projecting a 9% increase in profitability with sales anticipated to grow 11%.

Michael Kors is expecting to report on June 1, before the open.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Bentley expect a new record year in 2014

Bentley Motors Limited is a British luxury automaker, founded by Horace Millner Bentley 18 January 1919. Bentley is now a wholly owned subsidiary of the German Volksvagen AG. Bentley started the brand in Crecklewood (near London) and was acquired by Rolls-Royce in 1931.

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(Picture: Bentley  Continental GT V8 2014)

Bentley Motors Limited is the direct successor of Rolls-Royce Motors, which Volksvagen AG purchased in 1998. The rights to use the Rolls-Royce name and logo is still owned by Rolls-Royce Holdings plc, which is later licensed to BMW AG. They paid £40m for the license.

Volkswagen AG`s principal activity is the design, engineering, manufacturing and distribution of luxury automobiles sold under the Bentley marque, and the Bentley cars are largely hand-built in Zwickay, Germany.

As you probably know, Europe is in trouble and many of the economical reports doesn`t look good, but despite that, Bentley is not effected, and expect a new record year in 2014. Bentley`s biggest market is USA and the second biggest is China. despite the recession in Japan, Bentley is not effected by that either. So, Bentley has a stable market.

The luxury segment is good no matter what happens in the stock market or the economy at all. Rich people will always have money, so they will still buy luxury products like Bentley. Cheaper oil price will probably help the middle class and boost the car sale in that segment, but the luxury segment will still go strong. Rich people do not care about the oil and gas price. But in 1929 during the Wall Street Crash, Bentley saw the demand for its expensive products declining by the Great depression.

Porche have had a massive hit with their big SUV, and Bentely is out with a brand new SUV next year, and the price is $200,000. The test version of the brand new SUV is already on the road, and Bentley know that 95% of their customer already have a SUV in their garage, so they expect to enlarge their customer group.

The new SUV can boost Bentley`s sales by 50% to 70%, so the effect will be enormous for the firm. They produced 10,000 cars last year and expect to sell about 6000 to 7000 examples of their new SUV annually once the production is fully ramped up.

The new SUV sits on the same platform underpinning the third-generation Porche Cayenne, as well as Audi Q7 and Volksvagen Touareg. Lamborghini will spin the production version of is Urus SUV concept off the same architecture.

Bentley`s former boss Wolfgang Durheimer pushed hard for the development of diesel models, so it looks likely that there will be a compression-ignition version, but a plug-in-hybrid will follow shortly afterward as the first part of Bentley`s stated ambition to configure 90% of its cars as plug-ins by the end of the decade. What a competition on the SUV market next year.

Tesla will release their new SUV next year. In competition with Audi Q7, Lamborghini Urus, Porche Cayenne Turbo S, Land Rover Range Rover V-8 Supercharger and Rolls-Royce future SUV. But what is important to the customers? gasoline driven cars, hybrid or battery?

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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