The Michael Kors Outlet brand might be past its prime.
The fashion label, which enjoyed a stunning rise in popularity in recent years, is facing new challenges to its business. Michael Kors Outlet shares are falling after the company reported a weak outlook for the future.
Here are a few big problems with the brand.
1. Everyone is wearing Michael Kors.
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 who have experienced this phenomenon include Juicy Couture, Jordache, and Coach.
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2. Inventories are piling up.
Michael Kors is entering the current quarter with a 65% inventory increase, retail equity analyst Marie Driscoll writes.
While Michael Kors Outlet says the excess inventory is because of the company”s taking the e-commerce business in-house, Driscoll is skeptical it will sell.
“That”s a lot of inventory in an increasingly competitive category,” she writes. “I”m worried.”
She also compares Michael Kors Outlet to the Tommy Hilfiger collapse more than a decade ago.
“While the brand continues to enjoy vibrant demand, these investors are on to greener pastures,” she says. “It”s probably time to sell KORS shares!”
3. The strategy could backfire.
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 won”t 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.
Read more: http://mk.luckbagsoutlet.com