Michael Kors Brand Losing Value? Is It Oversaturated?By: Val Powell - July 24, 2014
The Michael Kors stock had a good run, but investors are now wondering if it has reached its full potential in the United States.
Michael Kors has released several brands targeting all three demographics of shoppers. They have products for the high-end market, the middle-market, and for discount outlet stores. Industry expert Robin Lewis said, “Some would argue all of those segments will simply end up competing with each other, thus cannibalizing the top end of the spectrum.”
Now, Lewis is comparing the Michael Kors brand to Tommy Hilfiger, which reached its peak in the market in the late 90’s.
Based on reports, Michael Kors’ revenue has increased 55.6 percent since December 2011. Its market shares also boosted to 312 percent in the same time period. The brand’s stock gains and revenue growth seems difficult to maintain over time. Analysts are fearful that the brand’s inventories are too much, which will eventually lead to lower earnings and compressed profit margins.
Michael Kors is not the only brand falling from grace. Coach, which was once at the top, has been struggling for a few years now with competition from Michael Kors and Tory Burch. Another example of a brand that has fallen out of the picture is Juicy Couture, which fell off the radar as their signature sweat suits were just a fad.
Barclays retail analyst Joan Payson said that the Michael Kors brand could continue to grow in Europe over the next two years. However, the brand remains at a risk with the decline in the North American market share. The decline is a big issue with the brand, since the region provides 80 percent of the brand’s overall sales.
Google Trends also shows that searches for Michael Kors have declined five weeks straight, starting in June. Lewis said, “Once a brand is declared as too accessible and overexposed by its loyal customers, no amount of fashion trickery will bring it back.” Is this the end for Michael Kors?
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