The high class luxury brand Michael Kors has had a successful run since its 2011 retail venture but recently a decline in Michael Kors' sales slowed through its luxury bags, watches and accessories. However, it's not because consumers are not purchasing, it's because consumers are purchasing smaller Michael Kors items.
Many have doubted the capability of the Michael Kors brand to reach all markets. When the brand expanded its retail outlets and opened up to mall department stores, it tried to extend its reach to millions of shoppers looking to increase their luxury and jet-setting profile.
In 2015, the doubts heightened when the brand continued to expand its logo in so many malls and stores that analysts are saying it might be shooting itself in the foot. The result showed a slow sales growth because of its expansion goal, it lost its aim to be an exclusive brand in certain classes - the kind of vibe consumers would like to carry when wanting to appear classy.
But Michael Kors turned the market's heads around when its recent earnings report showed that the brand is optimistic about its future. The fourth quarter of 2015 showed a slower sales rate of 0.9% compared to its previous quarters. The brand focused on deepening its discount rates on slow-moving merchs because they have found that consumers are more attracted to smaller items that comes with lower prices. In terms of quantity, the company has seen an increase in its bag category.
To further increase its value, reports indicated that the company pulled out of the department store deals in a plan to curve perception that the brand is too omnipresent. It is fixing its previous error of exposing the brand everywhere and because of the quick fix, stocks have risen to 25%. A portion can be credited not only to the handbag business but also to the watch business with an increase of 11% where the brand has focused on the digital and mobile industry.
