Brick-and-Mortar Retail Meltdown Has a Busy Month

After years of asset stripping by private equity firms and hedge funds. This morning, luxury handbag retailer Michael Kors Holdings, which had had stellar sales through 2014, revealed in its Q4 earnings report that it would close up to 125 retail stores and take a $125 million charge, to save $60 million this fiscal year.
Sales plunged 11.3% year-over-year in Q4, and the company lost $27 million, or 17 cents a share. It doused investors with a gloomy outlook for its fiscal year 2018, with revenues expected to drop over 5% to $4.25 billion, and with same-store sales plunging ‘in the high-single digit range.’
The company was dogged by heavy promotions, a ‘difficult retail environment,’ and a ‘product and store experience’ that didn’t ‘sufficiently engage and excite consumers,’ CEO John Idol said. So the company needs to enhance the store experience ‘to deepen consumer desire and demand for our products.’
Despite a ‘new $1 billion stock repurchase program’ – funded with the money the company is losing, so to speak – share plunged 8.5%.

This post was published at Wolf Street on May 31, 2017.