Michael Kors is in danger of getting 'lost in a sea of 'stuff''

pulse

November 7, 2018 5:51 PM

Michael Kors' products are frequently discounted, which means it's losing its status as an aspirational label.

S
ame-store sales dropped 2.1% at its namesake brand, mostly due to a decline in the European market.
GlobalData Retail's Neil Saunders says that Michael Kors is suffering from a brand image problem. By appearing on the racks of

Michael Kors shares tanked early Wednesday morning after the retailer reported worse-than-expected earnings results for the second quarter.

Same-store sales dropped 2.1% at its namesake brand. Meanwhile, sales at Jimmy Choo

Saunders attributed Michael Kors' woes to a brand image problem.

still suffers from a lack of definition and a reputation tarnished by years of ubiquity," he wrote.

"While there is nothing wrong with a luxury brand being edgy or even gaudy, we would argue that there is a subtle distinction between this and being seen as lowbrow — and unfortunately for , it falls squarely into the latter camp. This is a shame as some parts of the range are appealing, but these gems get lost in a sea of 'stuff.'"

Saunders said that Michael Kors also suffers from having a number of different labels at different price points, which all fall under one brand.

It's "difficult to justify a $2,450 Collection handbag when a by clutch bag is available in Macy's Last Act clearance section for a little under $51," he wrote.

Michael Kors' earnings results stand in stark contrast to Tapestry-owned brand Coach, which is one of its leading competitors and has been executing a successful turnaround effort to reclaim its luxury status. Same-store sales were up 4% at Coach in the most recent quarter.

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