Michael Kors has lost its status as one of the coolest brands in the fashion industry.
The company”s stock is underperforming, leading Morgan Stanley”s analysts to remove Michael Kors Outlet from its “Best Ideas” list.
Shares are down 37% in the past year.
Michael Kors enjoyed a stunning rise in popularity in recent years thanks to its trendy handbags and watches. But growth has been slowing lately, and the company has reported a weak outlook for the future.
So what went wrong?
Widespread popularity is the “kiss of death for trendy fashion brands, particularly those positioned in the up-market younger consumer sectors,” industry expert Robin Lewis writes on his blog. Lewis compares Michael Kors Outlet to Tommy Hilfiger, which reached its peak in the late 1990s.
Michael Kors is considered an aspirational brand, with consumers paying a premium for its label. Once everyone has the product, it is no longer considered cool.
Other brands that have experienced this phenomenon include Juicy Couture, Jordache, and Coach.
Michael Kors also has several brands at different price points, a strategy that could easily backfire, Lewis says. Kors has a high-end department-store brand, a middle-market brand, and a brand for discount outlet stores.
“Some would argue all of those segments will simply end up competing with each other, thus cannibalizing the top end of the spectrum,” he writes.
In other words, consumers will not pay $300 for a Michael Kors Outlet bag in a department store when they can get one at the outlet mall for half the price.
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