Michael Kors, the clothing brand known for its high-end fashion designs, has seen sales plummet at retail stores. According to a news release from the company,
“In the fourth quarter of fiscal 2017 the Company recorded impairment charges of $193.8 million primarily related to underperforming lifestyle stores. In addition, the Company announced today that it intends to improve the profitability of its store fleet by closing between 100 and 125 of its full-price retail stores over the next 2 years. Over this time period, the Company expects to incur approximately $100 – $125 million of one-time costs associated with store closures. Collectively, the Company ultimately anticipates ongoing annual savings of $60 million as a result of store closures and the lower depreciation and amortization associated with these impairment charges.”
The news follows the overall retail trend of stores closing, or remaining open while operating at a loss. Kors stores were at one time very profitable, when the brand was seen as new, cutting edge, and trendy. However, as the initial euphoria wore off, sales declined. Year over year, sales at retail stores have fallen 14.1%. Michael Kors wholesale numbers, which come from department stores that carry the Kors line such as Macy’s, Dillard’s, and Nordstrom, have fallen 22.8%.
Kors operates over 800 storefronts, meaning that up to 15% of its stores will be closing.