The luxury goods industry has faced a number of changes over the past two decades. Michael Kors is one of them. Kors have suffered some missteps and weakening demand as it tried to straddle the luxury and affordable accessories categories.
In order to reinstate it`s cache it started offering fewer online promotions, closed down underperforming stores and began innovating on new product lines which includes men`s footwear.
Kors is investing heavily in digital platforms in order to offer a more seamless customer experience at a time when online buying continues to expand.
International growth is anticipated to grow. Especially with acquisitions of brands such as Jimmy Choo. Credit Suisse reiterates an outperform rating on Michael Kors in front of the retailer`s FQ1 update.
«Our checks suggest F1Q trends were stable or slightly better than F4Q,» Credit Suisse writes.
The supply chain and retail network for the luxury goods industry have spread globally. However, Europe and the US have continued to account for a disproportionate share of sales. Although historically the industry has operated on a «West versus the Rest» basis, recent trends underline the growing importance of Asia, the Middle East, Latin America and Africa.
The sales for clothing and footwear in Europe and North America will fall from more than 50 percent of the global market in 2017 to less than half in 2018, while sales in Asia, Latin America, the Middle East and Africa combined will rise above 50 percent and continue to increase in subsequent years.
Most industry observers attribute this development not just to growing sales in emerging markets but also to innovative retail concepts and business models adopted in these regions.
The growing importance of non-western markets for the luxury goods industry has been supported by supply chain leadership, technological innovation and international investment. These factors will help maintain further strong growth in these geographical markets.
Italy is once again the leading luxury goods country in terms of the number of companies, while France has the highest share of sales.
China, France, Germany, Italy, Spain, Switzerland, the UK and the US together made up 83 percent of the Top 100 luxury goods companies and 90 percent of Top 100 luxury goods sales.
Cosmetics and fragrances was the top-performing sector in 2016, and the only sector with improving composite luxury goods sales growth, at 7,6 percent. Collectively, millennials and Generation Z will represent more than 40 percent of the overall luxury goods market by 2025, compared with around 30 percent in 2016.
Kors latest fashion is their exclusive graffiti print which celebrates street art and its influence on fashion. Inspired by 1980s New York, their new black and white graffiti print puts a graphic spin on todays fashion favorite jackets, shoes and bags.
Kors is still a solid company and a strong increase in store renovations will be rolled out more aggressively over the next few years. In addition, the company wants to expand Jimmy Choos store network, increasing the number of stores from 185 today to about 250.
Michael Kors Holdings Limited is expected to report earnings on Wednesday August 8, 2018 before the open, and the report will be for the fiscal Quarter Jun 2018. The consensus EPS forecast for the quarter is 1, which is 6 percent higher than Wall Street.
Revenues are also expected to come in higher at 1,16B as compared to the sell sides consensus of 1,14B. YoY EPS and revenue growth are expected to come in healthy at 25 percent and 22 percent respectively.
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