Fashion

Michael Kors Aims Its Retail Mojo at Men


Michael Kors (KORS), increasingly coveted by women from Sante Fe to Shanghai, is going after guys.

The design house, which reported yet another quarter of growing sales and profits, said this morning that it sees potential for up to 500 company-owned stores selling nothing but menswear. More immediately, one floor of its soon-to-open Manhattan flagship store will only have clothes aimed at men. The company will also launch a new cologne for men next month, along with a “thrilling TV spot reminiscent of an action movie.” Hold the Streisand; cue the explosions.

At the moment, however, Kors doesn’t have a lot of stuff to put in a men’s shop, unless it’s planning a bodega. As of this morning, MichaelKors.com featured a camo messenger bag ($398) and about 60 pieces of men’s apparel, some of which was slightly off-season (puffer jacket, $395) and some of which seemed, well, exceedingly floral (print polo, $125).

Here’s the thing about Kors: For all of its meteoric growth and surging overseas sales, the company is still all about handbags and little leather doo-dads (jet set travel card holder, $58). Some 70 percent of Kors’s sales come from those categories. Shoes add another 10 percent, and jewelry, including watches, accounts for 7 percent. In short, only 13 percent of Kors’s revenue comes from clothes.

The knock on Kors is that the company is trying to do too much too fast. It sells pricey goods that solidly fall in the luxury category (python tote, $2,995), but also plays to the masses with a more affordable line (“snake-print” clutch, $228). It has 605 stand-alone stores, yet wholesale accounts for almost half of its business thanks to nearly 1,700 dedicated sections in department stores—so called shop-in-shops.

The brand is getting spread thin and the build-out is getting expensive, some analysts say. Sterne Agee, for example, has been snooping around stores and noticing deeper markdowns. “Whether these ‘red flags’ are a tipping point in profitability remains to be seen,” the analysts wrote in a recent note.

In the meantime, Kors continues to prove critics wrong. It laid waste to Wall Street expectations again this morning: Sales in the recent quarter were up 43 percent from a year earlier to $919 million, and profit rose in step, gaining 50 percent to hit $188 million. In terms of sales at Kors stores opened more than a year, the company has beaten expectations for the past 10 quarters.

“We’re very proud,” Chief Executive John Idol said on a conference call. “And I just might add that I think we delivered best-in-class results in what other luxury retailers reported.”

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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Companies Mentioned

  • KORS
    (Michael Kors Holdings Ltd)
    • $75.21 USD
    • -0.09
    • -0.12%
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