It's a challenging time for the luxury sector. Michael Kors is the latest brand to show the strain.
On Wednesday, the fashion brand reported revenue for the fiscal fourth quarter ended April 1 declined 11.2%, while comparable store sales tumbled 14.1%.
The company said it plans to close up to 125 stores over the next two years—a cut that would represent roughly 15% of its global store fleet. As of April 1, Michael Kors has 827 stores. Its store count rose year over year in each of its global regions: In the Americas, the count rose from 390 stores to 398; in Europe from 177 stores to 201; and in Asia, it more than doubled from 101 to 228.
Among the 10 brands in the luxury, jewelry and accessories stores sector of eMarketer's Retail and Ecommerce database, six have reported revenue declines for the latest 12 months.
Millennial shoppers pose a special challenge for luxury brands. Accustomed to price comparisons and online shopping, and better-traveled than previous generations, millennials are savvy about prices and value. Strategies for dealing with the emerging generation of affluent shoppers include putting more resources against ecommerce, refreshing product lineups more rapidly and offering lower price-point goods.