Four months in: Michael Kors already making significant progress on Runway 2020

Grand restructuring plans captured by optimistic tag lines have become commonplace for luxury brands that have struggled to swiftly adapt to a changing consumer and retail landscape. In this series, we’ll break down the promises and analyze the progress of the different brands’ master plans to get back on track.

Michael Kors recognized it desperately needed to turn the ship around if it was going to remain afloat, let alone a viable luxury competitor.

In May, Michael Kors announced its Runway 2020 plan, a multi-part revitalization strategy designed to restore the brand’s diminishing luxury cachet. The plan came following several quarters of slumping sales and brand dilution, resulting from heavy department store discounting. One of the brand’s first tasks was to reduce the amount of product it held within mall brand retailers like Macy’s, while also excluding itself from coupons and annual sales. Shortly after, Michael Kors announced it would close 125 stores in an attempt to downsize and also improve the in-store experience at its premier locations.

“Prior to its restructure, Michael Kors was suffering the same affliction as Coach: loss of exclusively. Far too many products and sales promotions caused the company to become all too common, resulting in brand erosion and a major decrease in profits,” said Maddison Tailor, marketing director at digital agency Ansira.

 

Michael Kors has been late to the rejuvenation game, compared to competitors like Coach, which began its overhaul in 2014. Seeing the success of Coach, the company has since adopted several of its efforts, including focusing on strategic acquisitions. Shortly after Coach acquired Kate Spade, Michael Kors purchased Jimmy Choo, a move that will allow Michael Kors to greatly diversify its product portfolio while regaining luxury clout.

These changing policies are meant to create a framework for financial growth in 2018, Michael Kors CEO John Idol has continued to tell inventors. The brand reported modest growth in the second quarter of this year, impressing investors with a narrowing gap of decreasing sales: Same-store sales fell 5.9 percent, beating the expected 8.9 percent, and total revenue decreased to $952.4 million, compared to industry estimates of $918.6 million.

“While this is not exactly a glittering set of results from Michael Kors, the numbers are something of a step forward, compared to last quarter’s incredibly dismal performance,” wrote Neil Saunders, managing director of research firm GlobalData Retail, following the second quarter sales report. “That said, it is clear that the group still has an incredible amount of work to do in rebuilding the brand and reconnecting with customers.”

 

Here’s a look at where Michael Kors is both succeeding and missing the mark thus far, according to its Runway 2020 plan.

Promise 1: Diversify products while cutting down on inventory
Michael Kors has long been synonymous with handbags. The category currently represents 70 percent of the company’s overall sales. As part of Runway 2020, the brand hopes to bring that number to 62 percent by lowering wholesale distribution and increasing the number of products in other categories. It is also adding limited-edition items at higher price points, an effort to cultivate a sense of scarcity, and thus exclusivity — a core component of the luxury market. (For example, for fall, the brand launched a collection of handbags that retail for upward of $1,900, significantly higher than the average Michael Kors bag price tag of around $300.)

The notion of scarcity will also be bolstered through the Runway 2020 initiative of delivering 40 percent less product, while simultaneously increasing new styles by up to 70 percent in areas where the brand is focused on expanding. In order to forge an identity that transcends handbags, Michael Kors is growing its menswear, ready-to-wear and footwear categories — the latter of which the Jimmy Choo acquisition will greatly serve. Menswear will be a major focus for Michael Kors over the next few years. According to retail analytics firm Edited, menswear is expected to grow more rapidly than womenswear in the next three years, and is estimated to be valued at $33 billion by 2020.

Thus far, sales for seasonal collections have increased from 20 percent of overall sales for the spring 2017 collection to 37 percent for fall 2017, as reported by Fung Global Retail and Tech. This showed the company is experiencing success in diversification and new products.

Promise 2: Scale back on brick-and-mortar stores and shift to e-commerce, with the help of social media
In addition to shuttering 125 stores, Michael Kors is focused on renovating 100 premier locations and enhancing its flagship stores with a focus on digital integrations. This is one of the longer-term components of the Runway 2020 plan, as the closures will take place over the next two years. When all is said and done, it’s estimated to save $60 million a year.

Downsizing brick-and-mortar also means putting more effort into e-commerce and online sales. Despite a tendency among other luxury brands to avoid Amazon, Michael Kors has not shied away from the e-commerce juggernaut, offering a number of handbags and accessories on the site. Additionally, social media continues to help with sales for the brand: It has taken advantage of Instagram’s shopping feature, which links images to product pages on the Michael Kors site. (It helps that the brand has increased its social media follower base by 25 percent since 2016, up to a combined 36 million, according to Fung Global Retail and Tech. It remains one of the top ten luxury brands on Instagram.)

Michael Kors’s success on social has also helped inform its customer loyalty programs, thanks to insights gained through engagement. It is expected to launch KorsVIP this month, a personal stylist app that will connect top shoppers with brand employees for personalized consultations. KorsVIP will also provide VIP consumers with exclusive services and rewards.

Promise 3: Experiment with smartwatches and wearable technology
Michael Kors closed out its New York Fashion Week show this September with a celebration of two new models in its Access smartwatch collection, part of a new collaboration that integrates Google Assistant voice-activated technology. The watch includes a My Social app, which allows consumers to use photos from their Facebook and Instagram accounts as custom watch faces.

While the brand is showing a concerted effort to test new technology, it’s unclear whether these watches will have much of an impact in the long run. Several luxury brands also offer smartwatches, and while the Michael Kors variety has a more accessible price point of around $300 — compared to, say, the Louis Vuitton Tambour Horizon, which retails for close to $3,000 — the demand for smartwatches is still inconclusive. Apple Watch sales went up 50 percent this year, after a significant decline following its launch in 2015. That prompted traditional watch company Fossil, among others, to experiment with the smartwatches. (Fossil announced its foray into wearables in January.) The increasingly crowded space makes it difficult to anticipate if Michael Kors can use the watch to gain an edge over other brands.

First Look: Michael Kors Opens Flagship Store At Elements

Michael Kors’ newest flagship features chic design elements that perfectly complement the label’s sophisticated aesthetic

 

 

Michael Kors has opened the doors to its highly anticipated Elements flagship store. Spanning two floors and covering 2,500 square feet, the store’s chic design is an embodiment of the brand’s simple yet sophisticated aesthetic, right down to the finest details.

“Hong Kong is one of the world’s great fashion cities – it’s fast, it’s international and it’s glamorous,” says Michael Kors. “I’m thrilled to be opening a beautiful new flagship that offers our customers the full world of Michael Kors, including our exciting and fast-growing menswear line.”

To celebrate this exciting milestone, Michael Kors hosted an intimate cocktail party on October 26 with some of the city’s VIPs and celebrities, including Sammi Cheng, Nancy Wu, Louis Koo, Jennifer Tse, Simon Yam and his wife Qiqi. Artistic photographs taken by Gen.T lister Sean Lee-Davies of the label’s new Bancroft handbag were showcased at the glamorous event. The photographic exhibition, which brings together Michael Kors and Hong Kong’s unmistakable contemporary chic style, will be on view until November 5.

 

Any true fashionista knows that it’s all about making an entrance, and shoppers at the new Michael Kors flagship are welcomed by a shimmering façade lit by luminous screens made of light-reflective facets inspired by the designers’ affinity for metallics.

The store’s interior features dark wood floors with accents of limestone, shelves of brushed stainless steel, Venetian wallpaper and Calcutta marble fixtures. A soft, muted palette of soft browns and greys, mixed with warm woods, textural finishes and luxe materials, perfectly reflects the label’s refined jet-set sensibility.

Every category of Michael Kors product will be carried at the Elements flagship. The ground floor is home to a curated display of women’s accessories and ready-to-wear pieces from Michael Kors Collection and MICHAEL Michael Kors. This includes handbags and small leather goods, footwear, watches, jewellery, eyewear and a selection of fragrances.

The second floor is dedicated to the label’s increasingly popular menswear line, with pieces displayed on custom-built, blackened and polished stainless steel fixtures with grey smoked mirrors and grey marble display cases.

For a chance to win a Michael Kors Bancroft handbag, visit the Michael Kors flagship store at Elements before November 5. Find out more on mkbagsforsale.com

Burglars smash into Michael Kors store and grab handbags in raid caught on CCTV

Police have releasedCCTV showing a moped gang making off with designer handbags after stealing them from a shop. The thieves can be seen breaking into the Michael Kors store in Chelsea, west London, and emerging clutching several bags each.

 

They then ride off, with the whole incident taking place over less than 60 seconds. The incident happened on Duke of York Square just before midnight on February 20, police said. One man can be seen throwing a brick at a window before he and four others try to kick the door down, while others wait on mopeds.

 

One of the men drops some handbags as they ride off – with another brazen thief halting his own getaway to scoop them up. Police said they escaped along Kings Road.

 

Six people were arrested after the incident, but only one, a 23-year-old man, was charged with burglary. The other five were released without charge, the Met said.

 

Officers are working to establish whether the same gang was responsible for a similar burglary at Oxford Street’s House of Fraser on October 26.

 

Detective constable Sam Weller said: ‘We are appealing to the public to help us identify this gang. They are responsible for the theft of designer handbags and we would urge anyone with information to contact us.’

 

Anyone with information can contact Kensington and Chelsea CID on 101 or Crimestoppers anonymously on 0800 555 111.

Kristen Bell Soars in 5-Inch Heels, Mila Kunis Reveals Plenty of Leg at ‘A Bad Moms Christmas’ Premiere

Kristen Bell took her style to new heights at last night’s Los Angeles premiere of “A Bad Moms Christmas.”

The petite 37-year-old actress towered on the red carpet in 5-inch black satin peep-toe platform pumps. She paired the daring shoes with a sleek black and white Michael Kors Collection gown, accented with a striking crisscross design at the midriff.

 

Bell was accompanied by her comedian husband, Dax Shepard, who went for a decidedly more dressed-down look.

The “Parenthood” actor rocked gray jeans, a Christmas-themed “ugly sweater” and a pair of well-worn black Converse Chuck Taylor low-top sneakers.

 

 

“Bad Moms” co-star Mila Kunis looked chic in a black halter-neck gown by Cushnie et Ochs that featured glittery fringed sleeves and a thigh slit. She accessorized with a simple pair of Christian Louboutin patent-leather heels.

 

 

Other cast members who turned out for the premiere included Kathryn Hahn, Susan Sarandon, a newly married Justin Hartley, Cheryl Hines, Jay Hernandez and Ariana Greenblatt.

The movie — which releases in theaters across the country tomorrow — finds Bell, Kunis and Hahn reprising their roles from the original 2016 film. This time, the rebellious trio are grappling with hosting and entertaining their dysfunctional mothers for Christmas.

Michael Kors Wants Customers to Feel Like They’ve Met Michael Kors

mkbagsforsale.com turnaround plan hinges on making its customers feel like they’re being personally dressed by its namesake designer — even if they aren’t.

The company is revamping stores and training sales associates to deliver personalized style ideas that are handed down from Kors. Example: how to match a black-sequined-and-cheetah-print dress to a pair of calf leather sandals and a pouch for a cocktail party.

The goal is to win back customers with experiences — the current holy grail of brick-and-mortar chains. With Amazon.com Inc. and other e-commerce players encroaching on apparel, retail brands are scrambling to offer something that you can’t get with a mouse click.

“When each customer leaves, we want them to feel like they were styled by Michael himself,” Chief Executive Officer John Idol said in an interview over email.

The Michael Kors brand needs a boost after an overly aggressive expansion led to years of flagging sales, heavy markdowns and slowing customer traffic. The company has shuttered stores to help give the business a more exclusive feel, but now it needs to show it can grow again.

In addition to redesigning its shops and increasing its product catalog, it’s relying less on department stores — a channel that’s marred the brand by associating it with deep discounts. And Michael Kors plans to add the personalized recommendations to a new mobile app, which will be offered next year.

“Personal service is an absolute need right now,” said Pamela Danziger, founder of luxury researcher Unity Marketing Inc. Style advice and makeover tips in stores “could be a real powerful strategy and make the Michael Kors store a destination,” she said, noting cosmetics retailer Sephora has used a similar recipe for success.

Investor interest seems to be rising: The value of Michael Kors shares has increased by about a third since the beginning of August. They surged 22 percent to $45.25 on Aug. 8 after the company reported profit and sales that exceeded estimates — largely by introducing new products and curtailing discounts.

The shares rose as much as 1.2 percent to $49.40 on Wednesday.

The company wants to cut revenue generated from retail partners to 30 percent from about 40 percent in the last fiscal year. To achieve this goal, Michael Kors is selling less to department stores that have been battered by falling foot traffic and working to draw shoppers into its own stores. To entice them to pay full price, it has started offering a wider range of products and has stepped up advertising for new products such as Mercer and Italian-made Bancroft handbags.

Glitzier Stores

Michael Kors also hopes glitzier stores will attract customers, and is using one located in an upscale mall in Short Hills, New Jersey as the template to follow. The 3,000 square-foot store recorded “strong” double-digit growth within three months of reopening, Idol said.

This bright spot amid a wider panorama of declining same-store sales has given the company confidence the format can be replicated as it revamps more than 100 stores over the next two years. Idol said the layout allows for quick reconfiguration so the stores can adapt to customers’ preferences. Additionally, as many as 125 underperforming stores will be closed.

The company also wants to diversify its revenue stream by selling fewer handbags — instead it will offer more clothing for both women and men, and smartwatches and shoes. The latter will be boosted by the company’s recent purchase of shoemaker Jimmy Choo for about $1.35 billion, including refinanced debt. Demand for handbags, which make up about 70 percent of Michael Kors’s revenue, has waned in recent years.

Competitor Coach Inc. has taken a similar track as it attempts to provide a wider range of goods, even changing its name to Tapestry Inc. to reflect its move to build a multibrand conglomerate.

Fashion Makeover

But Michael Kors has to prove it can continue to cut down on bargain sales and navigate a rise in competition that has eaten into margins, said Arun Daniel, a senior portfolio manager at investment boutique J O Hambro Capital Management. More clarity is needed on its progress when it announces its second-quarter results on Nov. 6 as well as its performance in the holiday season, he said.

“That will be the true test for them. The Street has given them the benefit of the doubt,” he said. “For the stock to move to the next level, they are going to have to beat all the metrics.”

Danziger agreed that Michael Kors needs to show that the measures it’s touting are connecting with consumers if it wants to return to growth.

“The jury is out whether it’s enough to save Michael Kors,” Danziger said. “It has a following. It’s not dead, but it’s not growing.”

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