In another blow to retail, Michael Kors announced store closings of up to 125 of its retail locations, about 15 percent, after worse than expected sales.
Wednesday's announcement didn't detail which stores would be closing. It was also not known how many jobs will be lost when the stores close. The company said it eventually expected to save $60 million due to the closings, CNN Money reported.
Sales at stores open a year or more fell 14.1 percent in the most recent quarter where figures were available and are continuing to fall. Michael Kors’ wholesale business fell even more at 22.8 percent, meaning that department stores aren’t stocking as much inventory, Fortune reported.
The announcement caused stocks to fall nearly 10 percent on Wednesday, and they have fallen nearly 25 percent in 2017, CNN Money reported. Competition in the luxury retail market is getting stiffer because of decreasing mall traffic and increasing online retail buying from sites like Amazon.
USA Today reported that the company acknowledged that its store experience for consumers had been underwhelming. Although it is closing a large number of stores, Michael Kors intends to open new stores in strategic locations, it said.
Moody’s Investor Service said Wednesday that the luxury industry has stabilized, but Kors said it expects its sales slump to continue into the next fiscal year with near double-digit losses, USA Today reported.
Consumers were not really surprised about the closings, hoping for big sales and pointing out that products were now available at discount chains like T.J. Maxx and Marshalls as well as department stores rather than just at Michael Kors locations.
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